Things To Consider When Purchasing A Property In A Trust Structure
Dilleen Property Group 2022
A trust structure is essentially an ownership structure that allows an individual or other legal entity (company) to hold assets for the beneficiaries. Trust structures have been around for quiet some time and the main reason why individuals open a trust account is for asset protection and to pay less tax.
If you are just starting out your portfolio, Eddie recommends to not worry about trust structures in the early stages of building your property portfolio. Eddie bought his first 8-9 properties in his individual name and then began purchasing in a trust structure, company name, and self managed superfunds once he had enough capital.
When you buy property in a trust structure you can only purchase with certain deposit amounts. For example, if you are purchasing a property in an individual name you can have a deposit as little as 5% or 10%. However, if you are purchasing in a trust structure, most of the time it will be minimum 20% or 30% deposit. From Eddie’s experience, it is easier to obtain finance when purchasing with an individual name. Further to this, if you are purchasing with a trust structure it can sometimes take a longer time to get your loan approved. It could take up to a few months. Ultimately, if you purchase with a trust structure it depends on your position and personal reasons.
It is important to note that trust structures also involve fees to have the account set up and a lot of paperwork. This can be timely for an individual and become a burden. Tax returns for trust structures is usually more expensive and you will be subject to greater land tax. It is important to always consider your position and analyse how you can leverage your capital effectively to build your portfolio.
Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.