The straightforward answer is ‘Yes,’ as long as the trust deed allows it. However, there are significant tax implications you should consider before you start living in a property owned by a trust or think of purchasing your home through a trust for asset protection.
The first hit comes in the form of losing tax deductions. Expenses related to the property, such as mortgage interest and maintenance costs, may not be deductible if the property isn’t generating rental income. This could affect the trust’s tax position.
If you, as a beneficiary, live in a trust-owned property rent-free or at a discounted rate, the trust may be liable for Fringe Benefits Tax (FBT), as this arrangement could be considered a fringe benefit.
The principal place of residence (PPR) exemption, which typically allows homeowners to avoid capital gains tax (CGT) on their main residence, usually doesn’t apply to properties owned by trusts. Therefore, any capital gain from the sale of the property will be subject to CGT.
Lastly, even though you are living in the property owned by the trust, you may still be liable to pay annual land tax to the state revenue office.
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