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From: Ctrader .
Chris Batten in "5 reasons not to buy rental properties in your own name" makes the following cases for using trusts:
1.
Problem: After paying off the loan used to acquire my rental property if I re-borrow to acquire a non income producing asset the interest on that loan will NOT be deductible.
Solution: If the property was acquired in a hybrid trust with rights to income contracted to a particular benificiary then interest on a borrowing by the trustee to extinguish an obligation to pay a portion of the net income to that benificiary would be deductible to the trust regardless of what the beneficiary did with the money.
2.
Problem: if you own a rental property and later wish to transfer it to your family trust or superfund you will incur full ad valerum duty (eg $900,000 property would attract $35,990, a $500,000 property would attract $17,990).
Solution: If the property was acquired in a unit trust and had a value less than $1 million then the trustee of the unit trust could redeem the units you hold and issue new units to your superfund or family trust. There is NO stamp duty on the issue and redemption of units in a unit trust in NSW where the unencumbered value of the real estate is less than $1 million.
Is this correct and does the the above stamp duty situation have application in any other states?
Ctrader
Chris Batten in "5 reasons not to buy rental properties in your own name" makes the following cases for using trusts:
1.
Problem: After paying off the loan used to acquire my rental property if I re-borrow to acquire a non income producing asset the interest on that loan will NOT be deductible.
Solution: If the property was acquired in a hybrid trust with rights to income contracted to a particular benificiary then interest on a borrowing by the trustee to extinguish an obligation to pay a portion of the net income to that benificiary would be deductible to the trust regardless of what the beneficiary did with the money.
2.
Problem: if you own a rental property and later wish to transfer it to your family trust or superfund you will incur full ad valerum duty (eg $900,000 property would attract $35,990, a $500,000 property would attract $17,990).
Solution: If the property was acquired in a unit trust and had a value less than $1 million then the trustee of the unit trust could redeem the units you hold and issue new units to your superfund or family trust. There is NO stamp duty on the issue and redemption of units in a unit trust in NSW where the unencumbered value of the real estate is less than $1 million.
Is this correct and does the the above stamp duty situation have application in any other states?
Ctrader
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