Transfer property to Family Trust

[ruboanto]

ive learned so much from stalking this forum but this is my first post. So I hope I'm putting this post in the right space.

10 years ago my parents 'gifted' land to my brother who took out a mortgage to build a house on the land and rented it to my parents. Since then my parents have separated and the house now sits vacant. My brother wants the house off his portfolio so he can purchase a home for his growing family.

Since the land originally belonged to my parents they want to be sure that we can split the profits for their children (there are 3 of us). So we were thinking of transferring the property to a Family Trust controlled by a company of which Us 3 siblings are Directors.

My question is: Is this the best option? Will my brother get slapped with huge CGT therefore not worth the trouble? Or do we just sell the property, pay the CGT and just deposit the profits into the Trust.

Ideally we would like to transfer to the trust, rent it out and draw the equity for other IPs.

 

[RPI]

Hi

Welcome

Which state is the property in? Stamp Duty is state based and it would be good to know that before we go into more detail

 

[Terry_w]

My question is: Is this the best option? Will my brother get slapped with huge CGT therefore not worth the trouble? Or do we just sell the property, pay the CGT and just deposit the profits into the Trust.

Probably not. A discretionary trust is generally not a good idea for 3 different families. What if 2 gang up on 1?

CGT would apply on the transfer too, market rates.

 

[ruboanto]

Thank you for the replies. Property is in NSW.

 

[Terry_w]

have you considered just selling and splitting the proceeds (after tax and costs).

 

[RPI]

Thank you for the replies. Property is in NSW.

I would suggest that going to pay TerryW to asses your situation directly would be money extremely well spent.

 

[Paul@PFI]

ive learned so much from stalking this forum but this is my first post. So I hope I'm putting this post in the right space.

10 years ago my parents 'gifted' land to my brother who took out a mortgage to build a house on the land and rented it to my parents. Since then my parents have separated and the house now sits vacant. My brother wants the house off his portfolio so he can purchase a home for his growing family.

Since the land originally belonged to my parents they want to be sure that we can split the profits for their children (there are 3 of us). So we were thinking of transferring the property to a Family Trust controlled by a company of which Us 3 siblings are Directors.

My question is: Is this the best option? Will my brother get slapped with huge CGT therefore not worth the trouble? Or do we just sell the property, pay the CGT and just deposit the profits into the Trust.

Ideally we would like to transfer to the trust, rent it out and draw the equity for other IPs.

All the reasons NOT to do that in NSW :
- Loss of the land tax threshold entirely
- Profit split wont be assured for any of the three
- CGT on transfer
- Stamp duty on transfer

Selling up and using the a trust may sound OK but there will be issues with entitlements not be assured, control of trust a concern and a bit more.

Q : Do you all want to receive benefits of the sale or not ? If so wouldn't a sale and split of the cash allow each of three to do their own thing ?

 

[ruboanto]

than you all for the feedback. I think its best if we just sell up, it does not seem worth the troubles.