Hi everyone,
I’m a total newbie to the forum and need some help/advice/suggestions.
I’ll start at the beginning so it makes sense.
Hubby and I have 3 IPs and a new business. My stepfather heard that the directors of our new biz were approaching a certain person for capital to grow the business. He then told us that he had some “company money” available and would be happy to lend it to us to grow our business instead of borrowing from the other guy.
However, hubby and I have decided that our new business is too risky and we wouldn’t like anything to go wrong and ruin our great relationship with my stepfather. However, I can’t get the idea of using that money for some other use out of my head! Because it is “company money”, my stepfather said it could only be lent to another company as opposed an individual. So, I have planted the seed that I could start a new company and use that money to invest in property.
I feel like I will have to “sell” this idea to my stepfather and convince him that I know what I am doing! Naturally, he doesn’t want to lend money to a fool. However, I don’t really know the ins and outs of investing under a company structure other than that I lose a capital gains discount. I am in need of any advice/suggestions/ideas so that I can make the most out of this opportunity, convince him to lend me the money and buy well.
I am really hoping someone out there can help :)
ThanksI don’t really know the ins and outs of investing under a company structure other than that I lose a capital gains discount
Hi Seinfeld and welcome to the forum 😊
There are many differences to investing via a company than individually. To name a few, yes, you’ll lose CGT discount, also no land tax concession nor negative gearing.
If I were you, I would do some online research and then approach a broker so you could discuss specifics with them.
Your stepdad might like that you believe that the current company is a risky investment and instead you suggest a more conservative investment. Since you have a few IP, you should be able to demonstrate that you know what you’re doing, especially if you’ll pitch to him the specific investment and strategy you have in mind before he actually pays up.
Would also suggest to have all understandings in writing to avoid (or at least minimise) “he said, she said” discussions down the line.
Hope this helps?
Cheers,
EthanEthan Timor | Aligned Finance Pty Ltd
http://www.alignedfinance.com.au/
Email Me | Phone MeActive Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)
Companies get a separate land tax threshold in most states and they can retain earnings too so they can be a great way to own property – tax can potentially be less than that in your own name.
Your step dad’s company can lend your company money and can secure this by taking a second mortgage, either registered or unregistered. This should help the company secure its debt. There should be a written loan agreement between the two companies and each party should seek separate legal advice.
You should also seek legal advice before you set up the company on how it should be structured – probably one director and the sharehold being the trustee of a discretionary trust would be worth considering.
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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