Property Investment Trust

Advantages of  a Property Investment Trust

The Property Investment Trust also gets you a land tax threshold in most States (not in NSW) which means once you have used up your land tax threshold buying further properties in a Property Investment Trust will save you thousands of dollars in land tax

How does the Property Investment Trust differ from other Trusts

1. No vesting date

Unlike most other Trusts, the Property Investment Trust, does not have an ‘Expiry Date’ of up to 80 years where the Trust by law needs to be wound up which may trigger Taxes such as Capital Gains Tax and Stamp Duty. The Trust can last in perpetuity with no tax bill surprises in future for family members still running the business.

2. Net benefits

The whole idea of Trusts such as a Property Investment Trust and other structures is to bring a NET BENEFIT to you. This is naturally part of the process we go through with our clients and should be part of the process your accountant go through with you.

Example:

If it costs you $8,000 p.a. but you save $15,000 p.a. in tax or other benefits and some could be land tax etc than one would certainly consider it because the net benefit is $7,000pa.

3. Overcomes issues with other Trust Types

The  Property Investment Trust has been specifically  developed for property investing and eliminates the problems associated with the using the other Trusts for property investing such as Discretionary, Unit and Hybrid Trusts.

Combine the Benefits of a Life Interest and Property Investment Trust 

Example:

Purchase a property to live in for short period of time with the intention to move out and retain as an investment property

• What structure can be used so that we you can  use a trust to hold the property when it reverts to an investment property?
• How to minimise land tax while living in  principle place of residence (PPR)
• How to take advantage of the zero capital gains tax (CGT) applicable to a PPR

Three Step Solution

Step 1. Secure property in a Property Investment Trust  Step 2 – The Property Investment Trusts sells life interest. Step 3 – Sell remainder of life interest back to PIT when you move out Tax Consequences

Features and Benefits 

• No CGT when you sell remainder of life entitlement

•  No land tax while living in property under life interest

•  Stamp duty paid by trust on buying remainder of life interest only on increased value (purchase price less value of remainder of Life interest)

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