澳洲Australia property Best Structure to buy 10 or more properti


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi, i'm looking at buying 10 or more properties over the next 12 months (Holding for 10 years or more) and i have the following questions.

1. Whats the best structure to set this up in ( Trust with a company trustee)
2. Whats the best way to show my company income as i would not like to draw down a wage as i earn $145,000 from my current job and i will lose to much in tax drawing an income. Company is only taxed at 30%
3. How do i use both mine and the companies income when applying for finance.


Would love any suggestion you all my have, thanks

glen finning  

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Hi Glenn

Welcome

Structures are more complicated overall than mainly the focus on income tax.

Asset protection, borrowing potential, land tax issues, estate management, maintenance costs etc are all issues that need consideration, and as thus its hard to provide any specific content

Id suggest having a long chat with a good IP savvy accountant, there are a number that post here

what state do u reside in ?

ta
rolf  

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Rolf Latham said: ↑
Hi Glenn

Welcome

Structures are more complicated overall than mainly the focus on income tax.

Asset protection, borrowing potential, land tax issues, estate management, maintenance costs etc are all issues that need consideration, and as thus its hard to provide any specific content

Id suggest having a long chat with a good IP savvy accountant, there are a number that post here

what state do u reside in ?





ta
rolfClick to expand...


Thanks for the reply, i live in sunny Queensland.  

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glenfin said: ↑
Hi, i'm looking at buying 10 or more properties over the next 12 months (Holding for 10 years or more) and i have the following questions.

1. Whats the best structure to set this up in ( Trust with a company trustee)
2. Whats the best way to show my company income as i would not like to draw down a wage as i earn $145,000 from my current job and i will lose to much in tax drawing an income. Company is only taxed at 30%
3. How do i use both mine and the companies income when applying for finance.


Would love any suggestion you all my have, thanks

glen finningClick to expand...
1) depends on what you are buying. Negative geared properties? Commercial properties? Need more info.

2) Your company income would have to be declared in any loan application. If you are self employed the bank will add this into your income for serviceability purposes at the company rate if you so choose. Banks do this to 'see through' any structuring you've done because at the end of the day, they are interested in your OVERALL cashflow, not the clever accounting or structuring you've done.

3) See 2)  

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Aaron_C said: ↑
1) depends on what you are buying. Negative geared properties? Commercial properties? Need more info.

2) Your company income would have to be declared in any loan application. If you are self employed the bank will add this into your income for serviceability purposes at the company rate if you so choose. Banks do this to 'see through' any structuring you've done because at the end of the day, they are interested in your OVERALL cashflow, not the clever accounting or structuring you've done.

3) See 2)Click to expand...



Thanks, I'm building homes around the $400,000 so they will be be negative geared. If it was in a company structure I thought I Would be able to claim interest repayments, GST on the build etc.  

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Hi Glenn

Have a chat with Martin Ryland

He posts here and really knows his stuff

http://www.rylandts.com.au/html/s01_home/home.asp

ta
rolf  

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glenfin said: ↑
Thanks, I'm building homes around the $400,000 so they will be be negative geared. If it was in a company structure I thought I Would be able to claim interest repayments, GST on the build etc.Click to expand...
If you are going to purchase vacant land and build on it and then keep the property for rental - you will be incurring a lot of losses on the way by way of holding costs, not to mention depreciation etc when the building is actually rented out.

Having a company structure isn't good in this situation because all these losses you incur while constructing the property will be trapped inside the company without any income to offset it. Since you will be negative geared the entire time - you will be wasting your tax deductions.

The best way for you to access the negative gearing and depreciation tax benefits is to have all the properties in your own personal name. That way, you can access the depreciation write-offs when you start renting it out against your normal income. I don't think you can write-off the holding costs while building the actual property until you actually sell it (it forms part of the capital base I believe). You could also potentially use a unit trust structure but that's more complicated.  

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The best structure? Best, in terms of what?

You could have 10 companies as trustees for 10 unit trusts with the units held by 10 separate discretionary trusts, or maybe some of the units owned by yourself for negative gearing purposes (if need be).

Each trust would hold one asset.

You could then have one separate company to act as a beneficiary for any income from the trust so as to max the tax at 30%.

But, many things to consider - one being cost to run and set up!  

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Thanks all for your quick replys. Correct me if I'm wrong but wouldnt it be better to buy in a company that makes an income so I can claim all expense, interests etc? As my company is a property development company making around $200,000 profit per year.  

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The problem with buying in an existing company is:
1. If the company has problems all your properties could fall into the hands of creditors. Property development is very risky.
2. A company is rigid and not flexible with any profits taxed at 30% and no easy way to distribute to family members other than by having a trust as the shareholder.
3. No 50% CGT discount either

A better way would be a trust I think, but then you have the problem of offsetting losses. You could maybe distribute some income from the property development business to the trust with some careful planning though  

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I agree with Terryw that it is better not to jeopardise your own personal investment properties just to save a few tax dollars in the short term. Companies are notoriously bad for property investment for the reasons that Terry has suggested as well. Trusts or personal names are usually the way to go for long-term holders.  

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Australian investments...

Can't wait for the day I renounce my tax resident status here and get taxed at a flat rate of 16% company tax and 0% dividend tax in Hong Kong.

And when the A$ reverts, the buying power if I ever come back for a holiday would be :D :D :D  

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I talked to a good property accountant who recommended I set up a unit trust with company trustee. But now I'm having trouble contacting him again and need to get this trust set up before the 17th so I can finalise a deal. I could get my regular accountant to do this and I imagine it would be a regular vanilla type trust. Is one unit trust as good as another? Or are there benefits in having a specialist set this up.

thanks
Stephen  

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Not all unit trusts are the same. There are many different possibilities and ways to draft the deed depending on your circumstances. Some for instance wouldn't qualify for the land tax free threshold in NSW - only fixed unit trusts would.

There are also many other issues once you have the deed. Who is to be director? constitution of the trustee company, share holder(s) of the company. Who is to hold the units and in what capacity? One or more unit holders? Different classes of units. Asset protection issues, etc etc.  

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how much would it cost to have a sit down chat with one of those IP savvy accountants?  

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cadence said: ↑
how much would it cost to have a sit down chat with one of those IP savvy accountants?Click to expand...
Hi

A more appropriate question might be what would it NOT cost.................... ;)

250 to 500 an hour is the going rate depending on a few things

So thats the cost that you DO know, the cost you dont know is if you do not do that research, and end up with the wrong vehicle


ta
rolf  

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Rolf Latham said: ↑
Hi

A more appropriate question might be what would it NOT cost.................... ;)

250 to 500 an hour is the going rate depending on a few things

So thats the cost that you DO know, the cost you dont know is if you do not do that research, and end up with the wrong vehicle


ta
rolfClick to expand...
2nd that. Dont scrimp a few hundred for a consult fee now as getting this wrong could cost you thousands or 10s of. I just spent a few k on my accountant at 275 an hour and he made me triple his fee after it was deducted. totally worth it.

dale gatherum goss has a booklet called "trust magic" which is fairly comprehensive. also ed chan and someone else put out a book "how to legally reduce tax without losing money"  

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