Trust questions

[ggumpshots]

Hiya!

As I understand it, one of Dale's main reasons for keeping a PPOR in a trust (beyond the obvious asset protection) is simply that so far, most of the PPOR's have been bought with the intent of them becoming IP's a few years down the track when we moved house (again).

So, the CGT issue really is irrelevant, and the other tax benefits are nice, too

And more often than not, we'd rather an IP in a trust than in one's own name.

Enjoy!

James.

CGT is irrelevent?
If I buy a PPR and then convert it to an investment property after a year I then have a period of 6 years in which to sell with no CGT applying............that would seem a good reason not to have a PPR in a trust.....ignoring obvius asset protection issues.
What Capital gain has your property achieved over 6 years........that calculation could be huge
Add to that land tax and the $ Value soon mounts up

 

[JamesGG]

Hi,

Perhaps I should have been more specific...

CGT is irrelevant to us, because, we plan to never sell any of our properties.

Also, ggumpshots, my understanding is that the 6-year rule only applies if you have no other PPOR in the meantime - which means if you purchase another home, it cannot claim the CGT exemption upon sale.

Enjoy

James.

CGT is irrelevent?
If I buy a PPR and then convert it to an investment property after a year I then have a period of 6 years in which to sell with no CGT applying............that would seem a good reason not to have a PPR in a trust.....ignoring obvius asset protection issues.
What Capital gain has your property achieved over 6 years........that calculation could be huge
Add to that land tax and the $ Value soon mounts up

 

[redwing]

My understanding as well James..you can only ever have one PPoR cant you?

In my case my last PPoR (now an IP) I was in for 2 years..

the one before (Now an IP) I was in for two years..

The one before that (Now an I) I was in for 1 year..

I still hold all of these so the strategy seems to have some merit for me ?

Where am i now..Housesitting..then next property

REDWING

 

[goddessk]

I have to smile as I started this thread with my questions, and now I am coming back to add some comments! My how much I have learnt from this thread and from speaking to people along the way. Thanks everyone!

I agree with Redwing. I plan to rent out my PPOR and I will not be buying another PPOR in the short term. I am going to live with my partner and he is buying the property we will live in so the 6 year CGT rule works for me.

And James, never say never....

 

[WASP]

hmmmmmmmm

hmmmmmmmmmmm

Now i'm interested in coastymike's *deleted* post, it may have been interesting?

Coasty, what do you think of dale's book and idea?

 

[coastymike]

WASP,

Ive read both of Dale's book and they are great. Easy to read but cover the concepts of trusts, and particularly the use of hybrid discretionary trusts, for property investors.

Although im not a proponent it doesnt mean that if structured properly I wont do it. I just lay out the advantages vs disadvantages and let the client decide. Certainly is this was a persons first home then the advantages may outweigh the disadvantages. In Sydney as well it may allow a first home buyer to purchase their own home by claiming the interest on the mortgage as a tax deduction. You just need to ensure it is established correctly, you have excellent documentation and structure it along Janmor's. Be always aware of Part IVA. If you know all the facts and have analysed the scenario then you can make a decision either way.

Im not one who says it cant be done. I just say do it properly and be aware of the advantages and disadvantages. Im my personal case it would have cost me much more in CGT than the benefits from the deductions over the time.