To use a trust or not?

Hi,

My partner and I currently own 2 properties, one PPOR and the other an investment.

We own both in our own names (jointly).

We are keen to purchase more property whenever we can release equity, which we are now in a position to do again, so we could potentially own many properties in the future.

Most of our future properties would be investments, however at some stage we may move on from our current PPOR to a new one and rent out our current PPOR.

We are considering whether or not we should use a trust as own ownership structure from here on.

At the moment we think it may be over complicating things, too much paperwork, setup and ongoing fees, borrowing complications, and we don't feel as though we are a huge risk of being sued. We run our own business together, however it's not a dangerous occupation in any respect.

The sole reason we would be looking at using a trust would be asset protection, however we are questioning whether we need that asset protection...

We have liability insurance for our business, and landlord insurance for our investment property, and we are wondering if this may be enough.

Any help and also advice on where to get advice on this would be most appreciated.

Thanks :)
 
Probably not
- if there is a possibility you will live in it.
- if you haven't hit the land tax threshold.

But will also depend on your unique situation.
 
But you should take a serious look at your business situation. Is it run through a pty ltd company? Have you given any personal guarantees? Read contracts carefully. Who is director.

There are heaps of different ways to structure things without buying in a trust. Buying jointly may not be a good idea.
 
Hi Terry,

Thanks for your replies.

Business is a partnership at the moment. We have considered a company but haven't yet really hit the income levels to make this option seem useful.
 
Hi Terry,

Thanks for your replies.

Business is a partnership at the moment. We have considered a company but haven't yet really hit the income levels to make this option seem useful.

Ah. the most dangerous structure known to man!
 
hmmm yes I understand your point if someone takes legal action against our business as we are both personally liable for all assets that we own....which are currently in our own name....company gives more protection I guess.... but also you have higher accounting fees, more administration, plus super and workers comp to pay....so weighing that all up, so far we haven't thought we should move to a company...but perhaps we should reconsider again!?
 
What is the threshold for trusts for land tax in nsw? Is it the same as individuals?

There is no threshold for trusts in NSW. (excluding special disability trusts, SMFS).

If the trust is a fixed trust the unit holders may be considered owners and get access to the normal land tax thresholds.
 
Thanks Terry, sorry just to clarify, is a fixed trust the only way to have the land tax thresholds in nsw apart from buying in your own name?

Thanks.
 
Thanks Terry, sorry just to clarify, is a fixed trust the only way to have the land tax thresholds in nsw apart from buying in your own name?

Thanks.

Others include, company, SMSF, disability trust, testamentary trust for the first 2 years. Maybe a testamentary trust with a life estate depending on the circumstances.
 
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