As only a natural persons can apply for a first home owners grant and stamp duty concession is it possible to buy a property, live in it for 6 months as a permanent place of residence and then sell it to a company which is effectively controlled by yourself and some partners? Are there any legal problems with this or is it not recommended for another reason? thanks in advance
It could be done, but you would have to pay stamp duty on the transfer, get a new loan, new loan fees, legal fees etc. Companies will also pay more CGT than an individual when you sell and negative gearing losses cannot be offset against your personal income.
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
Why do you want to do this? What is your line of reasoning?
K
ahhhhh i didn't think of the stamp duty on the transfer- good thinking. Ok so that idea is out. Secondly with the CGT, from what I have researched small business' receive a 50% reuction much like if you sold it personally. To be a small business is to-
Have a gross revenue less than 2mil
And be conducting a business.Im sure there would be some way to apply an investing company in a way that would satisfy the 50% reduction?
thanks again
I would reread your info. If you are carrying out a "buisiness" of realestate then you are considered trading and as such not entitled to the 50% discount. Well, at least that is my understanding.
Mick
yeh ur right i reread it and its only for active assets which does not include property for investment and im assuming evn if the main premise of the business is to invest it still wouldn't count.
Im thinking the company idea is starting to suck. With a trust and you want to pay out some money to the person with the lowest tax threshold is it simply a journal entry and then the cash can go to anyone within the trust or is there something illegal going on here?
A trust would be better than a company. Distributions have to be paid out to the person/company who could then gift it or loan it back to the trust (asset protection issues here).
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
Alright so for tax purposes the company sucks. However the partnership will be between my father 2 friends and myself and i think the biggest issue is asset protection and the unlimited liability. Any recommendations or passing comments?
In that case, maybe a company trustee is a good idea. Each partner will still be liable for the whole loan though. However if one wants to get out of the deal, it may be easier to let then leave without changing title deeds etc.
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
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