澳洲Australia property Business or personal property investment?
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
Today I am seeking opinions and advice (pros and cons) with whether or not to begin investing under a business name, I appreciate any comments/feedback and those who take the time to read what I have to say.
My situation - I am currently 20 years old, saved almost 80% of everything I have earned since 17 and still have a good time it's my happy balance, looking to get into property investment, positive gear like crazy pay off properties create some form of domino effect where my payments additional to tenant payments = minimum interest payments to the bank, further the income then next property is far more easy to pay off. I am in a high tax bracket making good money, also doing my best to study the market where i wish to purchase, have time to fly where ever i wish to do maintenance/repairs.
My goal - Pay off my first property within 4 years and each property after within a shorter period of time by the age of 28 hopefully have at least 3. Another goal is to live at home as long as possible with minimum expenses .
My current outlook seems to lean toward beginning a business put as much money into it is as possible get taxed 30c in the dollar (from what I so called make after all expenses) rather then join my personal tax of 37c in the dollar and more then likely in 5 or so years 45c in the dollar. Correct me if I'm wrong although i believe whatever i put into a company from my personal money which has already been taxed i can withdraw that from the company later on down the track tax free (for random purpose such as a deposit for a property i wish to live in), I can use the company for a company car, home office internet/phone etc, if the day came where i were married and my wife was in a low bracket or did not work she could be my so called consultant/books employee payments b4 tax, 1st home buyers is only 7k where as with free stamp duty personal would have been worth it, although this could also be a benefit for within the next 6 months most first home buyers either purchased before the new law came in b4 2012 so stamp duty may set them back a further 6 months or so.
The only negative I have seems to be land tax is on land valued 350k+ where as personal is 600k+ in queensland now i believe and i am sure there are far more benefits to the business side although have not done enough research, but opinions and advice may set me on the right track and not waste time researching a bad choice .
Please express opinions, educate me! i would greatly appreciate it thanks for taking the time to read
A business name is just a name - not a separate entity. It will be the name of the legal owner that is recorded on title and pays tax.
What you probably need to decide is what entity to use. Personal name, joint names, company or trust - or even a combination.
Business tax deductions etc are good and all but only if you are making profit....think of how to make money first then worry about the deductions.
Also, you would generally never want to purchase an asset that grows in value in a company.
3 reasons not to:
1. Companies do not get the 50% CGT discount for assets held longer than 12 months. Trusts and individuals do. Company would pay 30% tax.
2. Income of a company when it flows to the shareholder changes its form. So a capital gain of a company would become a dividend in the hands of a shareholder.
3. No or little flexibility in distributing income. It would go to shareholders in fixed proportion to their shareholdings.
Why a discretionary trust would be more flexible:
1. An individual beneficiary would get the 50% discount on capital gains. This would reduce the top tax rate for assets held longer than 12 months to 24% or so.
2. Income retains its character. Say you had uncle bob with a capital loss from investing in failed business. The trustee could distribute a CG to bob (assuming he qualifies as a beneficiary) and this gain could be offset by the loss and could result in nil CGT.
3. Complete flexibility. Trustee decides who to distrbute income to and can change this each year - so stay at home mums could get $16,000 in income one year and pay no tax and then nil trust income next year when they go back to work.
1. Land tax may be higher.
2. Complex - more so than companies
3. Losses cannot offset your personal income - same for companies
So Terry my research should lean toward a combination of company/trust educate myself in both fields.
My understanding is the more people the better in a trust to "legally avoid tax", I would find difficulty getting others in a trust (pref blood relation) even with me as the appointer, therefore no purpose with myself alone in a trust.
Also in your disadvantages
land tax may be higher although if i have property in multiple states that stay under the land value limit or purchase units won't i avoid land tax?
and losses cannot offset your personal income, in a sense i am trying to invest and keep it aside from my personal income and adopt other methods for personal tax, i don't plan on using money on myself from the company until it were to progress, expand and diversify... once i put the hard yards in i figure, and i may be dreaming, that beside physical effort of maintenance and managing the property's, the company will constantly be able to pay off new property within its own profit (when 3 or 4 property's are owned) they can refuel loans by making 3x or 4x minimum payment, this sounds good to me in theory .
Feed back please =D thanks.
Even if you are on your own a trust would be preferrable over a company in my opinion.
This will give the greatest flexibility as you could distribute the profit to yourself - up to the level where you would be paying more than 30% tax. Thereafter you can distribute to a company. Later on you may get a spouse at some stage and he or she could be distributed to.
The trust just means flexiblity in this regard.
In NSW companies and trust don't get any land tax thresholds - unless the trust is a fixed trust. QLD they do but the threshold is lower. Every state has its own rules.
Ok i understand, thanks for your opinion Terry
Further study and reading is needed by me! Ill be posting again soon in this forum =D