Hi all,
my brother and I going to be doing developments together (long term). We will be keeping properties from this as well as replacing our wages in the future with the profits. We were thinking of setting up a company (as trustee) for either a hybrid or discretionary trust, (my brother is single and I have a wife on a fairly high wage). And possibly have another company as benefactor for the trust to cap the tax at 30% or individually be benefactors for the trust. Any ideas on what would be the best structure for us for asset protection and tax minimisation. Where would we get "paid(wage)" along the line for the best tax benefits if we have the second company? and I imagine we would park our properties in the trust, should we have separate trusts if we were keeping separate properties from our deals or it wouldn't matter.
Thanks in advance.
paulyp
It would probably be best to set up a trust initially and see how it goes, then you may want to change things a bit – eg you may want one trust each so it will be easier to go your separate ways down the track, if need be. It may also assist in serviceability if you have one each, as you can keep the guarantee to one of you. Just do every second property in each trust. You should still be able to distribute to each other and your families.
It may also be wise to separate those properties you are going to keep from those being built for a quick sale as there are different tax treatments.
Once you get moving you could maybe have another company which could pay you a wage and have the trusts divert profits to this one.
Probably a discretionary is the way to go, but hybrids can still be good if used properly.
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 for your help terry
paulyp
hi all ,we have just set up a company trust also and am just wondering how we go about approaching banks for finance now ,any comments would be greatly appreciated,
aaaworth
hi aaaworth,
you are talking about development i imagine? you need to work out exactly what you want to do with the development (the end result), then work backwards getting all the relevant paperwork along the way. They will want to see exactly what you plan on doing, how, when, end result, full feasibility (accurate), you will need to show them a nice profit usually around the 20% mark return, and many will still want security of some sort. You really need to talk to someone like Investors Direct they could help you with your specific needs, they often do seminars around Australia. I've never used them personally, but heard great things about them.
http://www.investorsdirect.com.au
hope that helps
paulyp
Hi aaaworth
Remember if you intend to finance these deals short term and on a full time basis your financier will consider the deal as a development deal and limit the LVR.
The application will more than likely be treated as a commecial proposition and the interest rate and application fees will reflect this.
Richard Taylor | Australia's leading private lender
Hi richard , thanks for the advice,we are looking to do short term deals at the moment to build equity,then hold properties later on.
hopefully want to put small deposit down and borrow rest off the property that we are buying ,then reno and put back on the market,also wanting to build a new house and borrow off the end value to fund the project and draw down as and when we need funds.can we do this if we have a company trussee of our family trust and if so how to go about it.
regards
aaaworthaaaworth
Neither of the mortgage insurers will provide for short term property development funding so you are probably limited to 80% LVR unless you are prepared to pay a early discharge fee then you may find a lender or 2 go to 90%.
Richard Taylor | Australia's leading private lender
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