Hi,
I'm new to investing in real estate, please excuse my ignorance and some of my questions will probably be really beginners stuff!
I haven't bought a property yet, and I'm wondering what the main benefits would be in buying a property using a company instead of under my own name?
Are there tax benefits? It would offer a level of asset protection, I assume? For example, if someone tried to sue me for something unrelated to my property, would my property asset be protected? Sorry to ask such a basic question, I'm really trying to learn everything I need to know from the ground up. Thanks!
A Discretionary Trust is what you might consider.
A Company offers little benefit.
If you are buying in Australia, there ae major disavantages in buying in a company. Changes were made to capital gains tax a number of years ago. If you own a property for over 12 months and you sell it you will recieve a 50% discount on capital gains tax. In other words if you make $100,000 you will only be taxed on $50,000. However this only applies if you buy in your own name or a trust. If you buy in a company there is no discount, you will be taxed on the full amount of your profit.
The only benefit of a company is if you are a trader. If it is your intention to buy and sell properties within 12 months of purchase.Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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Even better to buy it in your SMSF as if you hold the Asset for 366 days it is only taxed at 10%.
Richard Taylor | Australia's leading private lender
What is SMSF?
And would setting up a Discretionary fund provide the asset protection?
Thanks for the replies so far!
SMSF = Self Managed Super Fund
And Yes DFT will give you good Asset Protection.
Richard Taylor | Australia's leading private lender
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