Reply: 2.1.1.1.1.1
From: Robert Forward
Here is a scenario that is out of the box that may help with these situations. Please DO NOT take this as advise, it is only posted as a suggestion and that you need to take this information to your accountant and have them work out the details properly.
You own a property worth market value of $200k (I'll use straight figures here) in your personal name. You want to move it across to a company/trust structure. You owe $150k on a loan and it rents for $300pw (so basically positively geared)
Yes, you will have to sell it across, so why not sell it over to your "protection" structure for $300k, there is no law stopping you from selling it at this price.
Your protection structure will need to take out a loan of more or less $150k to pay out the existing mortgage, then you personally carry the finance for the remainder of the principle (in effect you are vendor financing your company/trust). So your company trust owes you $150k, and in effect the first $150k that the company/trust earns can go straight into your pocket tax free as it is paying out the remainder of the "Principle" on the property.
Yes, you will need to pay Stamp Duty on he $300k, but so what? If you are going to be able to earn $150k tax free from your company in the future it will save you many times more dollars then a measly few thousand dollars in stamp duty.
Yes there is an issue of Cap Gains Tax. We'll you may be able to structure the contract so the VENDOR (you selling) pays all BUYERS (your company/trust) costs, whatever they may be. This should help lower your payable CGT that you need to pay and a good accountant should be able to lower your CGT efficiently enough.
Another advantage is that your company/trust then retains a low LVR, in this case it is 50%LVR and the banks are going to love you for that and future purchases should be easy for the company/trust structure.
Anyway, this is something I have done, but only with the guidance of my creative accountant.
Disclaimer: This is only a suggestion and be read as such. Do your own Due Diligence with your nominated accountant or other qualified persons as this is NOT ADVISE.
Cheers
Robert
The Sydney "Freestylers" Group Leader.