FAQ 19 Should I buy my PPR in a trust structure?

We have been taught to protect our assets by using trusts(discretionary trusts) however in the case of our PPR this is not the wisest of things to do.

The reason for this is that assets owned in a trust or company name do not qualify for CGT exemption. On the sale of this property the trust would be liable for payment of CGT. This is probably the only property that should be purchased in individual name/s. This will ensure that the \’Main Residence Exemption\’ is retained and thus no CGT is paid on sale of the property.

But then how do I protect this very valuable asset and come to think of it any assets which I bought in my name / our names?

Further reading:-

Asset Protection Secrets.  Page 4

FAQ 20 How do I protect assets bought outside a trust structure?

It may be desirable for a PPR to be owned by a trust in the special case of a valuable family home that is intended to remain for the next generations. We suggest that a Private Ruling be obtained from the ATO prior to doing this. There are already some private rulings, however these only apply to those individuals which applied for them UNDER THOSE EXACT CIRCUMSTANCES.

Please read

ATO document IT2167 http://law.ato.gov.au/atolaw/view.htm?DocID=ITR/IT2167/NAT/ATO/00001

and

http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR200218/NAT/ATO/00001

These documents seek to explain about the eligibility of deductions normally associated with rental properties when applied to properties under trust ownership where the renter is not at ‘arms length’ from the trust.

Seek accounting advice from your accountant before adopting this method.

Michael & Sara
Ultimate Coaches

The information supplied is general only and not intended to replace professional advice. As coaches we do not provide advice on what or where to buy or to assess the suitability of a property. We advise students to perform their own due diligence when considering a property purchase.