Can my property, held in Trust bring tax benefits?

Question from Lucy updated on 23rd July 2007:

My partner and I both have our own houses. We are planning to move in together and rent out my house. To be on the safe side, we each want to put our own houses into a Trust. Is there a way my property can be in a Trust, but still bring me annual tax benefits?

Our expert responded:

Losses incurred within a trust are not able to be passed out to the beneficiaries to offset against the beneficiaries' personal income. The trust will offer you asset protection but if you want losses, it will not achieve that aim. If you are primarily interested in the tax benefits, then the answer may be to sell your property into a Loss Attributing Qualifying Company (LAQC)and then enter into a Section 21 Contracting Out Agreement with your partner. This is an agreement whereby each party gets their own independent legal advice with a view to contracting out of the Relationships Property Act. In any case, it may still be an idea to enter into a contracting out agreement for the protection of both of you.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.


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