Hi there,
We have a Family Trust and my wife and I are the trustees and beneficiaries, we would like to borrow funds from the Discretionary Family Trust to purchase land and build a house, does Div 7A loan apply ? or do we just need a commercial loan agreement between the trust and beneficiaries ?
Lender = Family Trust
Borrowers = my wife and I
Thank you for your time.
Kind regards.
Hi @laigo999
It depends. Are you receiving the loan as a private company beneficiary?
Sorry, forgot to ask the important question that the interest paid to the family trust becomes the trust's taxable income and we can capitalise the interest expenses as the cost base of the land acquisition and build as long as the loan agreement is in arms'length/commercial term. Is this correct ?
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