{"id":19762,"date":"2018-01-12T01:00:35","date_gmt":"2018-01-11T14:00:35","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=19762"},"modified":"2018-01-12T01:00:35","modified_gmt":"2018-01-11T14:00:35","slug":"tax-qa-transferring-land-titles-into-trusts","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/tax-qa-transferring-land-titles-into-trusts\/","title":{"rendered":"Tax Q&A: Transferring Land Titles Into Trusts"},"content":{"rendered":"

Got tax queries regarding your property investments and wealth creation strategies?
\nOur experts are on hand to answer them. Email your questions to:\u00a0editor.yipmag@keymedia.com.au<\/a><\/em>
\nQ:<\/strong>\u00a0My brother and I inherited a property in Melbourne after our father passed away in 2016. I would like to explore the option of transferring the title into two trusts \u2013 a family trust for my share, and a special disability trust for my brother. Would stamp duty be payable, as my father\u2019s will did not mention trust accounts? Also, if I turned it into an investment property, it would be positively geared as there is no debt on the property. I am not sure if this is the most sensible path forward. Should we just consider selling it (even though the cash isn\u2019t really needed) to minimise future tax complications?
\nA:<\/strong>\u00a0I am sorry to hear that your father passed away.
\nGiven that the property was transferred to you and your brother jointly in 2016 under your father\u2019s will, for CGT purposes you are deemed to have acquired your ownership interests in the property at your father\u2019s original cost base on his date of death. Assuming the property was your father\u2019s main residence and was not used for income-producing purposes at that time, any capital gain or loss incurred on the transfer of your ownership interests in the property to the trusts within two years from your father\u2019s date of death will be disregarded.
\nHowever, if you transfer ownership after two years from the date of your father\u2019s death, you will effectively be taxed on the whole capital gain accrued from the date your father bought the property to the date you transfer it to the trusts. You will be eligible for the 50% CGT discount. If the property was your father\u2019s main residence, the capital gain will be apportioned to exclude the period during which the property was covered by the main residence exemption.
\nIf you and your brother transfer your ownership interests in the property to the trusts for no consideration, or for an amount that is less than the market value of the property, the \u2018market value substitution rule\u2019 will apply.<\/p>\n

“There is no stamp duty exemption available in Victoria for a transfer from an individual to a family discretionary trust”<\/em><\/h2>\n

This means you will be treated as though you have sold your ownership interests in the property at market value.
\nIn Victoria, a stamp duty exemption is available for a transfer of dutiable property to the trustee of a special disability trust, provided that certain conditions are met. To be eligible, the transfer must be from an immediate family member of the beneficiary of the special disability trust; there must be no consideration provided for the transfer; and the dutiable value of the property must not exceed $500,000.
\nGiven the potential complexity of these rules, it may be advisable to obtain further specific legal advice, particularly in respect of whether the transfer is from an \u2018immediate family member\u2019 of the beneficiary of the special disability trust. For example, if the beneficiary of the special disability trust is your brother\u2019s child, then the requirement that the property must be transferred from an immediate family member of the beneficiary may not be satisfied.
\nNote that there is no stamp duty exemption available in Victoria for a transfer from an individual to a family discretionary trust. Accordingly, the transfer of the other half of the property to the family trust is likely to be subject to full stamp duty in Victoria.
\nAs for the benefits of leveraging the property\u00a0as an investment, this will depend on your specific circumstances, and you will need a licensed financial planner to help determine how the arrangement would fit into your wealth creation plan.
\nOriginally published as: http:\/\/www.yourinvestmentpropertymag.com.au\/property-management\/shortterm-rental-property-managers-what-are-the-benefits-243731.aspx \u00a0<\/span><\/a>\u00a0<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Got tax queries regarding your property investments and wealth creation strategies? Our experts are on hand to answer them. Email your questions to:\u00a0editor.yipmag@keymedia.com.au Q:\u00a0My brother and I inherited a property in Melbourne after our father passed away in 2016. I would like to explore the…<\/p>\n","protected":false},"author":176692471,"featured_media":19763,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13,31],"tags":[70],"class_list":["post-19762","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-story","category-your-investment-property","tag-featured"],"yoast_head":"\nTax Q&A: Transferring Land Titles Into Trusts - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/tax-qa-transferring-land-titles-into-trusts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tax Q&A: Transferring Land Titles Into Trusts - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Got tax queries regarding your property investments and wealth creation strategies? 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