Trusts are an increasingly popular ownership structure for Australian property investors. Buying a property via a trust offers tax benefits, asset protection and makes estate planning easier.
Before setting up a property investment trust, make sure you get legal advice and know exactly what you're getting into.
A trust allows a person or company to own assets on behalf of someone else, or on behalf of a group of people. The trustee is the person that controls the asset on behalf of the beneficiaries. The trustee maintains the assets in the trust and manages them for the beneficiaries.
There are three main trust structures property investors use:
The biggest advantages to buying an investment property through a trust structure are:
If you’re interested in setting up a trust to purchase an investment property, you may also want to research the trust home loan options available.
There are a couple of key issues to be aware of when you’re considering buying property using a trust.
Choosing the right ownership structure for your investment property is a complicated and confusing task. To find out whether a property trust is right for you, ask your accountant or financial planner for advice specifically tailored to your situation.
The phrase property trust can have different meanings in different contexts. This article has explained how buying an investment property in a trust works. Don't confuse this with a property trust.
A property trust, or property fund, is a professionally managed investment fund. Investors can buy shared in fund, and the fund is managed by a professional investment management firm.
The money you invest remains in the property trust until the property is sold and the profits are distributed among the investors. Investors also receive distributions of income at fixed intervals, similar to the way companies pay dividends to shareholders.
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Hi,
If I own a property in a trust, can I use equity on this to buy another property?
Thanks
Hi Hercules,
Thank you for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.
Depending on the lender, they may or may not accept your property in a Trust for security to buy another property. Generally, you’d need consent in writing if you will use third-party security. If you’re interested, you can read our article about how you can use a property as your security when obtaining a home loan.
Moreover, to get specialized advice, you’d be best to contact a mortgage broker to discuss your lending needs and in-kind your borrowing options.
I hope this helps.
Cheers,
Danielle