Many years ago, we purchased some cf+ properties via a Family Trust. All was going really well until we purchased 4 very negative geared properties through the same Trust. At the time, we knew this would be a drain on the cashflow, but we didn't anticipate by how much. Being in a Family Trust, of course means we can't negative gear against our income, & the losses stay quarantined in the Trust. We had a large buffer in place, so were unconcerned.
Of course, life happens, & times change. We went through a rather tough patch referred to in this post http://www.somersoft.com/forums/showthread.php?t=23497 & came out the other end a little shaken. We were able to hold onto everything, but most of our reserves were in the process dried up. Then this year our expenses for sport became much more than we had budgeted for, with 2 international competitions (4 family members competing at one & 3 at the other). To help finance this we sold one of the Trust properties (it was a dog) so was able to use the proceeds to go towards the rest of the expenses. In the meantime our expenses have increased from what they were several years ago as all the expenses from the Trust properties have been capitalised. I really don't want this drain on cashflow to continue.
So, I am sitting here, trying to figure out the best way to approach our dilema.
We could sell them to ourselves. This would incur Stamp Duty & CGT. The benefit of doing this is that we could neg gear against our income. The worst part of our current structure is the Land Tax. The Stamp Duty would come to around $25k. Currently our Land Tax comes to about half this amount & it would be soooo much easier to bear if it was to come from pre-tax $$. Of course if we were to put 2 in my name & 2 in Hubby's name, then this would lessen the Land Tax further.
We could just sell them. I don't want to do this though.
The only other option I can think of is to find something else to invest in that would balance it a little. Not sure on this one & not really any funds to do this with.
Of course we will seek advice, but was wondering what the Somersoft consensus on the matter would be.
Feel free to post any suggestions that may be of benefit.
Of course, life happens, & times change. We went through a rather tough patch referred to in this post http://www.somersoft.com/forums/showthread.php?t=23497 & came out the other end a little shaken. We were able to hold onto everything, but most of our reserves were in the process dried up. Then this year our expenses for sport became much more than we had budgeted for, with 2 international competitions (4 family members competing at one & 3 at the other). To help finance this we sold one of the Trust properties (it was a dog) so was able to use the proceeds to go towards the rest of the expenses. In the meantime our expenses have increased from what they were several years ago as all the expenses from the Trust properties have been capitalised. I really don't want this drain on cashflow to continue.
So, I am sitting here, trying to figure out the best way to approach our dilema.
We could sell them to ourselves. This would incur Stamp Duty & CGT. The benefit of doing this is that we could neg gear against our income. The worst part of our current structure is the Land Tax. The Stamp Duty would come to around $25k. Currently our Land Tax comes to about half this amount & it would be soooo much easier to bear if it was to come from pre-tax $$. Of course if we were to put 2 in my name & 2 in Hubby's name, then this would lessen the Land Tax further.
We could just sell them. I don't want to do this though.
The only other option I can think of is to find something else to invest in that would balance it a little. Not sure on this one & not really any funds to do this with.
Of course we will seek advice, but was wondering what the Somersoft consensus on the matter would be.
Feel free to post any suggestions that may be of benefit.
