IS IT BETTER TO BUY PROPERTY UNDER A TRUST ?
While asset protection is an essential step in building a property portfolio, buying under a trust is not necessarily the best option for every investor. In order to decide whether or not to buy in a trust, it is important to first seek expert advice from an accountant and solicitor with property investing experience.
BUYING PROPERTY WITHIN A TRUST, PRO’S AND CONS
While purchasing under a trust may offer more protection against creditors in the event you are sued or become bankrupt, there are also downsides you should be aware of.
One of these downsides is that, if you purchase under a trust in NSW, you will be subject to pay land tax from the very first property onwards as there is no land tax-free threshold in place.
THINGS TO CONSIDER BEFORE BUYING UNDER A TRUST
The type of profession you work in should be a major consideration as to whether or not you purchase under a trust. If you work in a capacity where you are at risk of getting sued, such as a chiropractor or brain surgeon, buying under a trust may offer more asset protection that otherwise.
If your line of work doesn’t carry this risk, buying in a trust may not be for you.
On the other hand, if you are looking for a way to keep your assets in the family after you die, buying under a trust may be a better option than buying under your own name.
TRUSTS DON’T OFFER FOOL PROOF PROTECTION
It is important to remember, that in the event you are sued, having a trust in place doesn’t guarantee fool-proof protection. Just as there are many ways to skin a cat, there are many ways to sue a person for all they are worth.
SPEAK WITH A PROPERTY ACCOUNTANT OR LAWYER
In any case, it is essential to speak with an accountant and solicitor who are both experts in helping portfolio building property investors. They can help you consider the best options available for you by assessing your situation, needs and any potential risks at play.
Have you purchased through a trust? What were the reasons behind your decision to do so? Please share your experiences in the comments section below.