All Topics / Finance / Company vs Trust

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  • Profile photo of richardproprichardprop
    Participant
    @richardprop
    Join Date: 2012
    Post Count: 3
    September 5, 2012 - 2:13 am

    Hi,

    I am looking at developing property in Melbourne, fairly straight forward purchase of land with existing house, either renovating the house or demolishing it, subdividing the land and building 3-4 units. I am trying to establish the pros and cons of doing this through a company or through a discretionary trust with a corporate trustee. Of particular interest is the ability to obtain finance through both of these structures, both for the initial purchase and subsequent construction finance. Are the LTVs and rates different for the different structures? Ideally I would like to roll the proceeds of this into another development etc to grow the business for the long term. Properties will be sold and not retained.

    Thanks for your help.

    Kind regards

    Richard

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    September 5, 2012 - 3:49 am

    Probably the loan side of things would be equal.

    Using a discretionary trust would give added tax flexibility though. You need specialised advice though as there are heaps of issues, especially if you end up making a loss.

    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 DWolfeDWolfe
    Participant
    @dwolfe
    Join Date: 2009
    Post Count: 1,253
    September 5, 2012 - 6:25 am

    Hi Richard,

    Terry is right, go get some specialized advice (pay for it). If you are planning to develop and keep developing, you may need to register for GST, what if you do decide to retain some, you may need a different entity to hold those.. the list goes on.

    Good luck, pay for some advice that is particular to your situation.

    Cheers

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
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    Profile photo of richardproprichardprop
    Participant
    @richardprop
    Join Date: 2012
    Post Count: 3
    September 5, 2012 - 11:03 pm

    Hi Guys,

    Thanks for the feedback, I will definitely be "paying" to have the structure set up. I am firstly keen to gain an understanding of the different structures so I can have a 2 way conversation as opposed to being told what is best and merely accepting it.

    I agree that if I wanted to hold any long term I would house them in a discretionary trust but this will be the odd one here and there from the developments, the main information I am seeking is to explore the pros and cons of company vs trust to develop in as this will be carrying out a trade in the entity so I would imagine that it is not best to hold any in the same entity for the long term, rather to sell them out to the long-term holding trust.

    Thanks for your help.

    Cheers

    Richard

Viewing 4 posts - 1 through 4 (of 4 total)

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