what will happen if hdt's outlawed?

[DavidMc]

Who was that guy who was going to set up a HDT a few months back and then redeem units to prove it's all wrong?

Did he follow through with it?

 

[redsquash]

Without discussing the validity of HDTs, if the ATO outlawed them (not by creating new law but by creating legal precedent in its interpretation of existing laws: that's why the tax laws are so vague), some interest deductions will be disallowed. Going forward, losses are trapped in the trust (the same as with a family trust).

Effect on property prices? I would say not much. The majority of property investors only have one IP. I can't imagine many of those people (who only plan on having 'one property to live in, one property to fund retirement' anyway) would be using HDTs? They'd just buy in their own names.
Alex

Wouldn't all income and expenses be then assessed at the personal income tax level? I dont see how any interest expenses wouldn't be allowed? Can you explain?

 

[alexlee]

Wouldn't all income and expenses be then assessed at the personal income tax level? I dont see how any interest expenses wouldn't be allowed? Can you explain?

No, because the asset will actually be owned by the trust. No one is disputing that the trustee is the legal owner. Income will definitely not be assessed at the individual level because the ATO isn't disputing ownership. The question is to what extent is the interest deductible at the individual level.
Alex

 

[Dazz]

the ato is examining hdt's to see if they are valid, and potentially introducing legislation to outlaw them.

if this comes to pass, i wonder what affect it will have on serious investors. there are very few positively geared properties in australia at the moment.

what are people's thoughts?

Hi Lizzie,

I have no idea what the definition of a "serious" investor is, but we don't have any HDT's and have been advised by our accountant to stay well clear of them.

I suppose we only buy properties that pay for themselves....or soon will do....so we have no need for HDT's.

Either DT's or UT's, controleld by corporate trustees set up individually for each purchase seem to do the job nicely for us.

....but then, we just have a dabble here and there, and therefore probably don't qualify for the "serious investor" tag.