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    CGT and selling a property out of a Trust

    Hi All,

    I wonder if someone can help me.

    I bought Our family home in a trust and we have lived in it for the past 13 years.
    It's bonded and I have personally been paying the bond and rates. Plus I have spent a lot on renovations and maintenance.

    Am I able to set that off as a loan to me personally and as a cost to the trust once I sell the property in order to reduce the CGT.

    Regards,
    Wesley

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    I am not a specialist on Trusts, so what ever I say here may be incorrect, and is my limited understanding of a Trust.

    There is a number of issues here which may render your Trust to be invalid as a safe way to maintain the property.
    I suspect the reason that you purchased the property under a Trust was to protect the asset in the case that you are personally liable for some future problem.
    If a creditor attacks the Trust, and the creditor can prove that the Trust is a front, because of the manner in which the Trust is controlled, then I am afraid that you have lost your the safety that a Trust was to provide.

    A few points :-
    The Trust is a Juristic entity and to maintain it it requires certain procedures to be adhered too.
    The Trust should have an independent Trustee in order to make it a rugged/protected entity.
    The bond should have been made under the name of the Trust.
    You then as a Trustee can stand surety on the bond on behalf of the Trust.
    The Trust should have been run as an entity, and the books should be done by an auditor and presented to SARS every year.
    In order for the Trust to be able to "afford" expenses, it has to have an income.
    All municipal invoices should be made in the name of the Trust.
    The income in this case would be that every month, the Trust would issue an invoice to the occupier of the property for rental.
    From this rental, the Trust would then service the bond, and pay the municipal levies.
    The rental should be higher than the bond, so that it can could use the extra income to cover life insurance and expenses required for maintenance.
    These expenses are then recorded in the books, and will be used to access the property value.

    The Trust may borrow money, however if it is a personal loan, it can not be an interest free loan.

    I think there are just too many things that need to be done correctly, and I suggest that you contact your local Trust attorney to get the best advice.
    If you do not know an attorney, post here and we will see if we can put you in touch with one.
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    Thank you for the feedback.

    Some of the points I have been doing and yes the reason for purchasing in a Trust was to protect the asset.

    I have a seperate bank account for the trust which I pay rent in to and that then pays the bond and municipal account as both are in the name of the Trust.

    I haven't kept financial records but have most of the receipts for the renovation work but this I paid for out of my own accounts.

    I agree it will be best if I get some proffesional advice. I will speak to my auditor first to see if they can help.

    Regards, Wesly

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