best structure for property partnership

Viewing 6 posts - 1 through 6 (of 6 total)

dumadiscount
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@dumadiscount
Join Date: 2004
Post Count: 3
June 30, 2004 - 11:49 am
hi, newbie here and i can’t really get a decent answer from the people i know. what’s the best structure (in regards to tax minimisation and asset protection) for two unrelated people going into property investing. i know a little bit that a discretionary trust with a corporate trustee would be best for a invidual but not sure about this situation… i have been told of these three options however:-
1) partner 1 has own discretionary trust w/ corporate trustee (partner 1 sole director)
partner 2 has own discretionary trust w/ corporate trustee (partner 2 sole director)
partnership of two discretionary trusts
2) same as (1) but company (with partner 1 and 2 as directors) acts as nominee for the partnership
3) same as (1) but instead of partnership of two discretionary trusts, have a company with the two discretionary trusts as shareholders
sorry if i sound as confused as i am. just want to go into property investing with a friend and we are trying to figure out the best way. any help and thoughts greatly appreciated! [blush2]
lifeX
Member
@lifex
Join Date: 2004
Post Count: 651
June 30, 2004 - 12:10 pm
Hidumadiscount,
I am considering a joint venture soon too.
Do a search for partnerships, joint ventures, partners, etc.
My accountant suggested two ways
1. Tenants in Common – simple!
or
2. A unit trust owns the property and you split the units between you and your partner, this could be through a family trust/company or your own names.
Find a lender that will do a split loan, and this divides up the loan however you want.
BEWARE. I have been warned that you must expect the relationship to go sour and have a lawyer write up a document that outlines each partners responsibilities, entitlements, expenses, entry and exit conditions, and anything that might come up. Circumstances always change.
BEWARE. I beleive you will both be responsible for the entire amount of the loan if the other defaults! You will also have your total lending capacity reduced by the full amount of any loan, yet only be receiving the benefit of 1/2 a property.
[dead2]
lifexperience
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
July 1, 2004 - 7:17 am
Good stuff LifeX
Terryw
Discover Home Loans
North Sydney
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Julia
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@julia
Join Date: 2004
Post Count: 217
July 2, 2004 - 1:16 pm
dumadiscount,
Your first option is the best if the property is not negatively geared.
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dumadiscount
Member
@dumadiscount
Join Date: 2004
Post Count: 3
July 3, 2004 - 12:48 am
thanks all for your help!
has anyone heard about a bill that may be passed that will make discretionary trusts obselete? one of my friends mentioned it
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
July 5, 2004 - 1:55 am
Do you mean the one that involves taxing trusts as companies? If so, this will have virtually no effect on the effectiveness of trusts!
Terryw
Discover Home Loans
North Sydney
[email protected]
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au