hi all,just wondering if there was any benefit in buying these +cashflow properties in a company name rather in my personal name.i read in Steves book that they re-invest their profits into new investments.if in my name i would just add this +cahflow to my own income.can companys invest profits to avoud this situation.cheers
Hi Simon and welcome
I wouldn’t buy anything that will appreciate in a company name as if you do sell, you will be subject to 30% tax – there is no CGT exemption for companies.
A better option if you wanted to not have it in your own name (asset protection and tax minimisation) is to set up a discretionary trust (possibly/probably with a company as trustee). There have been many discussions on this topic previously.
Cheers
MelHi Simon
Very Much agree with Melbear.
I wouldn’t buy anything that will appreciate in a company name as if you do sell, you will be subject to 30% tax – there is no CGT exemption for companies.cheers,
s.i.sHi Melbear and Simon,
I was just reading Steve’s reply to the question posted by “Damajoo” and he stated as follows:” Hi Anita,
Thanks for your post and welcome to the community!
quote:1. In whose name did you buy the properties?
In the name of the entity which we set up to contropl our property investments. I believe that owning assets in your own name is not the best idea as you can be sued and the lot is on the line. Instead Dave and I created a structure where we control our wealth without owning it in our own names.”
When Steve refers to the ‘entity’ is he referring to a company name which he has set up to be the ‘owner’ of all of his investments..? If so, how is he position at sale time in regards to the 30% tax you have mentioned..? In anycase, I was under the impression that you had to live in a property as the owner for at least the first 12months of ownership to avoid CGT…..I hope I have not spoken out of turn here….!?[
]Hi
I beleive Steve uses a company to buy as Trustee for a Discretionary Trust. The income goes to the trust, as the company’s sole role is trustee. The income from the trust can be then distributed to individuals or another company so that the max rate of tax paid is 30%.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terryw,
wow, that all went over my head!….how I can find out about trustee’s and discretionary trust and the relationships you mentioned with a company name..?…is that something that information I can get from the company you work for (Discover Home Loans) or is it something from legal advice….?Sorry Doggie, I am a mortgage broker not an accountant. If you want to lear about trusts, just do a search on the forum and buy the buy called “Trust Magic” by Dale Gatherum Goss. http://www.gatherumgoss.com.au
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terryw, wilco….
Yep, trusts are probably the way to go, although you won’t be able to get the 12 month CGT concession if you do so.
If you just buy property using a company, it’s also going to be difficult getting your capital out – there’s a bit of red tape you’ve got to go through.
At the end of the day, you need to work out what actually works best for your particular situation.
Cheers
Elysium-MHi All,
thanks for you help……was just wondering, Steve are you able to explain your comment that I placed in the string above that you had directed to “Anita” inlight of the replies I have recieved from terryw and Elysium-M?Originally posted by Elysium-M:Yep, trusts are probably the way to go, although you won’t be able to get the 12 month CGT concession if you do so.
Hi all
It’s my understanding that the CGT exemption still exists as trusts are a ‘flow through’ entity, so everything passes down to the invidivuals. This way you can still choose who’s best to get the income/CG.
Cheers
MelMel, that is my understanding and experience too. (I tried to post earlier but couldn’t due to that flodd control thingy)
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Goes to show how little I know!
Cheers
Elysium-MOriginally posted by Elysium-M:Goes to show how little I know!
Cheers
Elysium-MBut I think it shows more how useful a forum like this can be – to make us question what we think we know, and therefore open our minds.
I’ve certainly had to change a lot of the things that I thought I knew![
]Cheers
MelAbsolutely, Melbear!
I’d to think that you can learn a new thing everyday!
Cheers
Elysium-Mmelbear, terryw, elsium-m, thanks again. your help has been fantastic, i hope i can return the favour one day!….I think I will get my hands on a book like “Trust Magic” as you suggested terryw…..
thanks, and have a great weekend…[][]Hi all,
Another interesting thing about the CGT discussion is that if you Wrap a property…… you are not liable to pay CGT as you cannot be taxed twice on all the income you have recieved.
Check it out with your tax/accountant specialist….
I may have read the interpretaion wrong :o)
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