Hi everyone (and Dale in particular!),
We're in the situation that we almost totally own our PPOR and also have 3 IP's. One of the IP's is a house that we bought last year with the intention that we would live in it as our PPOR in around 3 years' time.
Our plan is to move into the new house (a current IP) and turn our current PPOR into an IP at that stage. I know that isn't tax effective as the current PPOR is almost paid off, and the interest on our new PPOR (current IP) won't be tax deductible once we move into it, but our current PPOR is such a great property that we can't bear to part with it!
Someone has mentioned to me that when we are ready to move into the proposed PPOR (current IP) we can create a family trust and provided the trust can get a loan, we can sell our current PPOR (new IP) to the trust. We then get the cash which we can use to pay off the new PPOR (using an offset account in case we decide in the future to rent it out again) and the trust can rent out the old PPOR (new IP) which will be far more tax effective.
The questions I have are:
1. Can we do this?
2. If yes, is this the most tax effective way of handling the situation?
3. If yes, and we use a standard family trust, I understand that we can't negative gear the new IP but we can use a hybrid trust to do this - is that right? And if so, is this a standard thing to do?
4. I assume that the trust will have to pay stamp duty on the purchase?
Thanks very much to anyone who can help!
Chantal
We're in the situation that we almost totally own our PPOR and also have 3 IP's. One of the IP's is a house that we bought last year with the intention that we would live in it as our PPOR in around 3 years' time.
Our plan is to move into the new house (a current IP) and turn our current PPOR into an IP at that stage. I know that isn't tax effective as the current PPOR is almost paid off, and the interest on our new PPOR (current IP) won't be tax deductible once we move into it, but our current PPOR is such a great property that we can't bear to part with it!
Someone has mentioned to me that when we are ready to move into the proposed PPOR (current IP) we can create a family trust and provided the trust can get a loan, we can sell our current PPOR (new IP) to the trust. We then get the cash which we can use to pay off the new PPOR (using an offset account in case we decide in the future to rent it out again) and the trust can rent out the old PPOR (new IP) which will be far more tax effective.
The questions I have are:
1. Can we do this?
2. If yes, is this the most tax effective way of handling the situation?
3. If yes, and we use a standard family trust, I understand that we can't negative gear the new IP but we can use a hybrid trust to do this - is that right? And if so, is this a standard thing to do?
4. I assume that the trust will have to pay stamp duty on the purchase?
Thanks very much to anyone who can help!
Chantal