AUSTRALIAN CAPITAL LENDING ON BORROWING WITH A TRUST
While there are significant advantages to a trust home loan, such as the 50 percent exemption from Capital Gains Tax (CGT), the process of purchasing a home through a trust is substantially more difficult. The administration and paperwork that must be lodged for this type of home loan to be successful is quite arduous, as the establishment of the trust and then the process of tying your property to that trust must be watertight.
Structuring the mortgage in the correct manner is vital, and we recommend you seek a broker or financial institution that has experience in purchasing properties through trusts. Our team of economic professionals come from a range of backgrounds, including real estate and taxation, and we can help you to both establish a trust and draw up your contract.
WHAT IS A TRUST?
While generally only associated with the incredibly wealthy, trusts are becoming increasingly commonplace with the middle class. A trust helps to determine who inherits the portfolio of real estate or other assets, how exactly the transaction is made, and why they inherit the assets.
Essentially, a trust acts as a shelter for your assets, keeping all your properties and valuable in one secure place and free from outside financial hazards. In most cases, a trust is established to the prosperity of your spouse, children, grandchildren and charities of your choice.
THE BENEFITS OF PURCHASING A PROPERTY THROUGH A TRUST INCLUDE
ASSET PROTECTION
Because the property is owned by the collective trust rather than an individual person, the property cannot be targeted by creditors in the event a member of the trust goes bankrupt, defaults, is sued or gets divorced. A trust allows an asset, or series of assets, to be anchored to the collective rather than the individual, therefore benefitting all.
DIVVIED PROFITS
When a trust is put in place, the profits of your portfolio are distributed amongst members of the trust. This can have positive tax implications, and it also allows you to donate up to $416 each year to your children below the age of 18.
GENERATIONAL PLANNING
When the owner of a property is incapacitated or passes away, the internal debate over who now owns the property within the family can unfortunately get quite ugly. However, when a trust is in place, the allocation of ownership is clearly laid out, preventing any dispute as all potential scenarios are drawn up in the contract. Another benefit of a trust is that the property is handed over without the extra cost of a stamp duty or various other expenses.
OUR SERVICES
At Australian Capital Lending, we can talk you through the complicated process of establishing a trust and appointing a trustee, determining if it could potentially suit your circumstances. If you are looking to purchase a property through a trust, contact our highly qualified team of professionals at Australian Capital Lending now!