Structure for Investing in Property & Shares

I bought an investment property under a HDT (MGS deed) structure and now would like to invest in managed funds and direct shares using a margin loan.

Should I be setting up a new seperate HDT structure for this or should I keep it all under the one trust?


Cheers

Apprentice

 

Views differ. An abundance of caution would suggest that mixing assets with different risk profiles is not prudent.

However, you may need to balance that with cost effectiveness and administrative simplicity. I.e. for some it may be overkill to have 2+ trusts...

 

^What he said^

It really depends on your risk profile and the cost.

 

but unless the property is cash flow positive, it is really a bad idea to trade shares in the trust, your better trading them in your own name as in the trust you wont have access to the franking credits, and they will be lost...

It depends how much will be invested and how much admin costs your current trust is costing you. If you can give us an indication of these it should make it more clearer...

 

But that depends on your approach. If you're conservative and trying to fly under the ATO radar, then mixing assets in the trust so that you declare a profit might be the way to go. If you've got big brass you-know-whats and want to declare negative gearing losses in your HDT and pass these out of the structure to reduce personal taxable income whilst simultanously cordoning off your CF+ managed fund returns in your wife's name or another trust then two trusts / split ownership makes sense.

Me personally, I've decided to mix my CF+ managed funds with my negatively geared IP in my one HDT. I want to declare a profit, but at least its much reduced by the negative gearing offset within the structure. Then I pass the now tiny profit out of my structure to my wife on zero income. Its company taxed at 30% and franked, but no more personal tax applies.

I'm still not confident in the HDT negative gearing deductability status holding up long term and want to just stay clear of the whole issue.

Cheers,
Michael.

 

But you are negative gearing your ip in the HDT? Just the end result is not negative because of the managed fund.

 

I see no real problem with investing in managed funds / shares in a HDT whilst owning neg geared IPs.
If you are a "share trader" then it is a different story. More risk, etc etc

Gives you more options and as michael W states it generates a profit in the HDT which is not a bad thing
NickM