Property Investment Articles
Should you put an investment property inside a trust?
So many finance professionals are quick to advocate the use of structures when it comes to property investing. In reality, the use of structures is a complex idea and there are a number of pros and cons to using them. This short video looks at one key consideration when considering if using a trust structure is right for you. Make sure you get specific advice from your accountant before committing to any trust or other structures to be sure if its right for you.
So there is so much debate amongst professional via accountants, financial planners, and legal profession around the idea of using a trust to hold properties as you invest.
Now having done it lots of different ways I’ve used multiple companies trust very complex structures ultimately what I realized is that there are pros and cons to doing it both ways now obviously you need to go and get some detailed advice and support in this area but the key difference between holding and asset in trust versus holding it outside of a trust is that the trust is seen as an entity which can yes distribute income but it cannot distribute losses.
So the thing to bear in mind is if you’re going to put an asset inside of the trust for the key purpose of protecting that asset from whatever that can be a useful tool but the downside is that if you’ve got interested on a loan that’s against an investment property or depreciation benefits then those are I guess losses or deductions are going to be trapped in the trust and can be only used to office income.
I think once you understand that then it becomes much easier to make decisions around whether or not having a trust actually makes sense for you. So use that as a starting point to discuss with your accountant or your advisor or your professional to make sure that you don’t just rush down the path of setting up a trust structure for the sake of it and that you’re actually doing it with some thought as to whether or not that’s going to be a medium to long-term solution for you.
Hope you found that useful, Salena Kulkarni, Phoenix Wealth Group.
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