THE PROPERTY NERDS: Trusts can cost you 47%

In this episode of The Property Nerds podcast, hosts Arjun Paliwal, Jack Fouracre, and Adrian Lee sit down with Ronesh Hargovind to explore the complexities of using trusts in property investment.

Hargovind explains that discretionary trusts are flexible structures in which trustees decide annually how to distribute income and capital gains, making them valuable for estate planning, asset protection, and multi-property portfolios.

He contrasts these with unit trusts, which issue fixed entitlements and are often better suited for partnerships or investors contributing unequally.

While trusts offer flexibility, Hargovind stresses that they do not automatically provide tax advantages, noting that negative gearing benefits can be trapped and strict rules govern distributions.

Land tax regulations also vary by state, affecting the benefits of discretionary versus unit trusts and requiring careful planning.

Choosing the right structure depends on finance, long-term goals, family considerations, and risk tolerance, with borrowing capacity being the starting point.

Hargovind emphasises the importance of working with an accountant familiar with property and trust structures to navigate these complexities.