Trust or not?

[esdarch]

Hi all,

We are a middle aged couple with middle income. So far it is quite simple to us to buy PPOR then first IP, both in our name with IO + offset account. There is some equity in IP and I would like to top up and park the cash to PPOR offset account with the intention to develop our spare lands in backyards.

Our plan is to build a studio/ bungalow at IP backyard, and a townhouse at PPOR (corner block) to maximize yield at both properties then looking for a new PPOR. Plan have been submitted to council and seem they happy with that.

After doing analysis panalysis, there is so much confusion about the right way to funding the development and set up the right structure to go further. Of course, we will see the professional, but hope someone shed a light first for dummies first.

I heard that trust maybe a good option. Should I put both properties in trust and run my own design/development business as trustee?

Thanks in advance.

 

[Paul@PFI]

Not enough information.

Unless you are a medical specialist like a gyno I would NEVER consider a trust to own my own home. Loss of CGT Land Tax and numerous other issues. Even then your wife would be the best owner.

 

[Aaron_C]

Even then your wife would be the best owner.

Then it becomes a question of how much do you trust your wife?

 

[Paul@PFI]

Who cares ?..Its a matrimonial asset. Title deeds dont concern the Family Court.

If she were a drunk a gambler etc then a issue can arise.

 

[Aaron_C]

Who cares ?..Its a matrimonial asset. Title deeds dont concern the Family Court.

Indeed but that wasn't my point...lol

 

[esdarch]

Thanks guys, I trust my wife now lol.

My neighbor, a doctor recommend this idea, so it may not apply for everyone.

So keep it simple then.

 

[Player]

Simple is best when starting out. Asset protection can be achieved with debt by having a decent enough LVR against these properties. Trusts have other benefits aside from asset protection especially with succession planning.

Oh, and when you do ever go down the path of using trusts to invest, I definitely wouldn't run your business through the corporate trustee company as you mentioned in your first post. Have a separate entity for this. The corporate trustee should be just that. It shouldn't trade.

 

[Terry_w]

Simple is best when starting out. Asset protection can be achieved with debt by having a decent enough LVR against these properties.

This is only half true. If you borrow money there will be high debt, but on the other side you will have money or assets which purchased with the money.

 

[Terry_w]

Hi all,

We are a middle aged couple with middle income. So far it is quite simple to us to buy PPOR then first IP, both in our name with IO + offset account. There is some equity in IP and I would like to top up and park the cash to PPOR offset account with the intention to develop our spare lands in backyards.

Our plan is to build a studio/ bungalow at IP backyard, and a townhouse at PPOR (corner block) to maximize yield at both properties then looking for a new PPOR. Plan have been submitted to council and seem they happy with that.

After doing analysis panalysis, there is so much confusion about the right way to funding the development and set up the right structure to go further. Of course, we will see the professional, but hope someone shed a light first for dummies first.

I heard that trust maybe a good option. Should I put both properties in trust and run my own design/development business as trustee?

Thanks in advance.

I have a checklist of about 15 items to go through when considering a trust.

The first thing to consider is land tax - in some states a trust owned home would result in land tax being payable even if you live in it.

Then consider CGT - would you be prepared to not obtain the main residence CGT exemption

etc
etc

 

[esdarch]

I have a checklist of about 15 items to go through when considering a trust.

The first thing to consider is land tax - in some states a trust owned home would result in land tax being payable even if you live in it.

Then consider CGT - would you be prepared to not obtain the main residence CGT exemption

etc
etc

Does timing has an important role in trust establishment? Should it set up at beginning or after equity achievement?

Thanks.

 

[Terry_w]

Does timing has an important role in trust establishment? Should it set up at beginning or after equity achievement?

Thanks.

Timing is not really an issue.

Once you own a property it is messy and complicated if you wish to transfer it to a trust later. So it should be a now or never approach at purchase.