Author: Alan Maddick 2/11/2017
So you want to set up a trust for your next property development or investment. Perhaps you have heard or read that they are a good idea or maybe you have used them before but here is my opinion on how to use them in property.
Firstly if you are a builder or developer you should set up an operating structure to do the business of building – paying architects, builders and sub contractors. I suggest in most cases a company is the best structure for this but obviously this can vary with your personal taxation situation.
Next you will need a structure to hold the property itself, this is where in most cases a trust is used in property development and investing (if a trust will be used at all). There are 2 main types of trust;
- Family trust – this is generally only used for yourself and your immediate family, it also does not allow any losses (such as negative gearing) to be distributed out of the trust.
- A Unit trust – this is often more appropriate if you are investing with a group of friends or associates as it allows very clear ownership of the asset based on the number of units held. Unlike a family trust all profits and losses are distributed out of the trust every year
Trust structures can get very complex and can also be made to sound very complex but really in 90% of cases you can keep things pretty simple and still achieve the outcome you want. Before setting up a trust you really should get some advice – please contact us here