Will a Property Trust Structure be the most appropriate for proeprty investing?

Hi formites,

We are considering purchasing more IPs for the intention later on this year, but want to structure it right for tax as well as for loans.

Currently we have our PPOR in joint names and IPS in a discretionary trust. However, as the IPS is still negatively geared we are not able to utilise the losses in our discretionary trust. We would like to have the flexibility to have asset protection as well as be tax effective in claiming the interest and expenses when it exceeds rental income. The reason why we do not want it in our own names because we run a business in the company structure.

Hence, we are looking into a Property Investment Trust (PIT) with a corporate trustee from Chan and Naylor.

We would love to hear from other Tax experts or experienced investors on the view on this structure – if this structure is as good as it is been marketed.

Alternatively if there is a much simpler structure that will suit our needs that would deliver the same results. What are your thoughts?

Also could anyone refer to us a proactive mortgage brokers in Melbourne who is also a property investor?

Thank you for all your comments so far.

TAG
 
Looking into Purchasing a PIT & Company

Hi TAG,
This may not be what you are looking for because we are obviously biased towards our PIT but we can also change your Discretionary Trust to a Hybrid Trust (but we cannot convert your Discretionary Trust to our PIT™ unfortunately because the PIT™ has no vesting date and requires major changes ). This way you can get the losses that are trapped in the Discretionary Trust out and be able to claim the losses. You will need to see someone at Chan & Naylor Melbourne to do this and they also have a finance department there which can handle your loans. Sorry for recommending ourselves but we do not know another Accountant down in Melbourne who can convert a Discretionary Trust to a Hybrid Trust except us. Maybe other Forumites know another Accountant who can convert a Discretionary Trust to a Hybrid Trust and recommend them as well.

Regards
The Team at Chan & Naylor
 
Chan and Naylor

I am very interested in the transferring of a dt into an hdt.

we have some major losses trapped in a dt and have investigated at length the option of converting it to a hdt so that any future losses would be claimable - even to the extent of paying an expert in macquarie group to look at it in depth for us.

the investigating was very frustrating because everyone believe that the process may/might/possibly/could/strongly believed it would trigger a resettlement - which meant paying of stamp duties on all the properties.

the may/might/possibly wording was the frustrating part because i couldn't find an expert willing to say "yes" or "no" because of the lack of rulings by the ato - however - they were all in consenseus that they believed it would trigger the resettlement (even if they couldn't answer definatively).

so what is the answer - will the conversion trigger a resettlement or not?
 
The definitive answer might possibly be maybe. That is, unless there is the possibility of someone (who might, or might not be able to give you a concrete answer), whilst potentially understanding the legislation, coming up with a likely answer.

But the probability is low.

Sorry Lizzie, couldn't resist!
 
Regarding converting a discretionary trust into a hybrid trust

Dear Lizzie
If the conversion is done incorrectly then no resettlement. The only other issue is why you are doing the conversion, if this is for tax reasons then the ATO applies its anti tax avoidance legislation and still denies you the deductions. We find that when we can sit with clients and understand what they are really trying to achieve then taxation is not the dominant objective and as such we can do the conversion with no resettlement and no anti avoidance concerns. This requires discussions to bring together the facts which can then be the basis of the conversion. Obviously this is not the case for everyone which is why we recommend a consultation.

Regards
Bianca
(on behalf of)
Chan & Naylor Australia
www.chan-naylor.com.au
 
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