renting ppor from trust

[DavidMc]

Spreadsheet - Renting from Trust versus Renting

Hi everyone,

I am currently doing the sums on renting an investment property from my Trust versus renting the same place from someone else.

I’m in a situation where I am looking to rent a new place. There is a small block of apartments where I’d like to live and one is for rent for $300 per week and one is for sale for $330,000. They are almost identical.

Here is my spreadsheet. I’ve listed my assumptions down the bottom.

What it’s told me is that for less than $100 extra per week I can purchase this place and enjoy the benefits of capital growth and home ownership!

I guess the major assumption that makes this work out nicely is the fact that I plan to keep this as a long term investment and therefore the loss of the CGT exemption doesn’t come into play.

I would appreciate your thoughts!


David.

 

[Aceyducey]

Hi David,

The numbers seem to make sense to me on a cursory glance.

The Trust can also partially furnish the house over time.

The key points to keep in mind are that your Trust must be active in investing, not simply set up to make this purchase for you.

Also the property is NOT your PPOR and as such you do not get the CG exemptions or any other benefits like first home purchase (as you've pointed out - but reinforcing the point for others reading).

BTW it is possible to get rental assistance if you are in a situation that provides for this.

Cheers,

Aceyducey

 

[redwing]

Makes sense to me to use the HDT if you've done as we have over the last few IP's and turned the PPoR's into an IP after 2-3 years, then move onto the next PPoR to add value to and save for the next..and so on..

If we had followed the HDT strategy (or similar as I belive there are other strategies not unlike this) it may have been better for us as many costs for the PPoR (now IP's) would be deductible/depreciable?

Hmmm..just thinking if we rent through this structure, would the last PPoR purchased under both names get the 6 yr PPoR exemption as well as its now an IP and we would be renting?