All Topics / Legal & Accounting / What’s the right structure to purchase IP

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  • Profile photo of TotTot
    Member
    @tot
    Join Date: 2005
    Post Count: 2
    July 21, 2005 - 12:58 pm

    Hi everyone,

    Just a quick question to everyone out there. i am intending to purchase my first IP this year with a good friend of mine. We intend to do this to reduce risk and ensure we can cover worst case scenarios.

    We do also want to set up the right structure to purchase these properties, however without having bought ‘Wealth Creation’, am wanting to know what structure is best to start out with. Is a simple partnership sufficient or should i contemplate setting up a trust?

    Any help or ideas would be very welcome.

    Thanks
    Tot

    Profile photo of camdercamder
    Participant
    @camder
    Join Date: 2004
    Post Count: 170
    July 21, 2005 - 11:02 pm

    Greetings and I bet you open a can of worms here because everybody will have a different idea.!!
    Our accountant suggested, “easy in, easy out” and we are a couple. Not partners (business) and I still am not sure if it is the absolute ideal set-up but maybe too little time to cahnge it now so will stick with that. Anyway good luck and will be keen to see other thoughts.
    Cheers for now Len

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    July 22, 2005 - 2:02 am

    You could be actually increasing your risk by buying property jointly. What happens if the other person simply refuses to pay and walks out?

    If you are sure about doing it together, go a written agreement drawn up covering things such as who pays what, what happens if one wants out and the other doesn’t etc.

    You could use a unit trust with your units held individually or owns by a discretionary trust. This will had to the cost a bit. But may be worth it if you are going to do more than one property.

    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

    Profile photo of catacata
    Participant
    @cata
    Join Date: 2005
    Post Count: 559
    July 22, 2005 - 4:43 am

    A partnership will increase your risk. If your partner goes bankrupt for some reason they will target you to pay the debt.
    A trust would be better but more info is needed to select which type of trust eg. current financial position and future plans.

    CATA
    Asset Protection Specialist
    [email protected]

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