Forum Replies Created
You can do it with a properly company with multiple share classes, but a company does not permit pass-through of the 50% capital gains tax discount.
I’m not a solicitor nor an accountant.
To my understanding, a trust permits the _flow_through_ of 50% capital gains tax discount. That is whether 50% discount can be taken depends upon the entity to which the capital gain is distributed.
I don’t think a trust gets the land tax discount (under NSW law anyway). I suggest asking the Office of State Revenue directly.
What’s a CPP?
Steve and Dave mention in their seminars (and perhaps in Wealth Guardian) that banks have a maximum amount they want to loan to a person, regardless of their cashflow and asset position.
The solution is to have properties owned by an entity (or entities), instead of owned by the individual.
The individual controls the entity(s) (usually best if it is a trust with a corporate trustee) and guarantees the loans to the entity(s). Therefore the loans are conditional liabilities of the individual, not actual liabilities, therefore do not show up on the individual’s ‘balance sheet’.
When an entity reaches the loan ‘limit’ a bank considers maximum, the individual uses another (perhaps new) entity to own and borrow for the next set of properties.
Suggest you consult your solicitor/accountant on this suggestion as I am not licenced to give advice.
Dazzling:
I disagree with you. It is probably a good investment for Westpac.
Just not a good investment for those who buy into the REIT. But there are plenty of people who like others to solve problems for them, so Westpac will probably do very well out of it.
I wouldn’t touch such REITs with a barge pole.
I checked out Defence Housing as an investment years ago. The gross returns were too low and therefore the investment too ‘negative’.
An investment trust’s returns reflect the quality of its underlying assets. If the underlying assets can only provide negative cash flow returns, how is a trust they are put into going to provide positive returns??? . . . . unless the market is smart enough to devalue the real estate in the trust (and therefore the trust units) to the point where the returns are positive.
And that is unlikely to happen, considering the market’s penchant for negative geared property.
To plagiarise Steve’s and Dave’s expressions:
We should NOT be buying someone else’s (Westpac’s) solution.
We should be buying problems we can solve.Andrew
Don’t know what state you are in, but here is my NSW experience:
They might charge you $137 for “the trust”, but check whether that includes the stamp duty to register the trust deed with the state govt. In NSW, my last trust (in 2000) cost $200 to register.
Really you are just paying them to provide you the text of the trust deed (which they will have on a computer anyway). See if you can get a softcopy of it for use when (and if) you create additional trust(s) in the future.I have a corporate trustee.
The company is ~AUD800 to ASIC to register and $212 a year.
Simple to register one.
More expensive to register the company if you don’t do it yourself.I do the trust bookkeeping/accounting/taxes myself.
My trust accounts need not be audited.So ongoing cost, with a corporate trustee, is $212.
Contact me if you want to know more.
In NSW, councils publish LEPs (local envirnoment plans) and DCPs (development control plans) which communicate their subdivision policies.
The webpage
http://www.cairns.qld.gov.au/council/index.html
says
“The council provides facilities, services and administers regulations, which enhance the lifestyle and wellbeing of a diverse community.These include:
– Building, subdivision and development approval.
etc.”So, I would ask them for the guiding documents.
Also, look at
http://www.cairns.qld.gov.au/council/cairns_plan/introduction.htmlMost superannuation accounts are not known for good returns.
If your house loan allows an offset account (where any balance reduces the interest on your home loan), I’d put it in there (so it is available for investement).
If it doesn’t allow an offset aco<edited> and your house loan allows you to redraw, I’d pay it into the loan account.
If neither, you have to consider how likely it is you want to use that money for investment.
Keep in mind that (if you are paying income tax) your investment return must be more than your home loan interest rate before it is worthwhile to invest the money rather than pay off your home loan. The amount depends upon your marginal tax rate.
Andrew
Assuming it is in NSW, the Land Titles Office has a record of all owners.
You can visit them in Sydney CBD (perhaps also other offices around the state) or go via one of their online brokers to get the registered owner.
Andrew
An addition to my original post:
I had a look at Investment Detective today and there are some purchasing costs I do not know how to estimate, e.g.
– legals
– mortgage registration (with whom?)
– building inspectionAndrew
Steve
Three other things I would check to see if they would add value and flexibility to a strategy:
1. What is the zoning? In light of the industrial area nearby, is anything permitted on the site other than residential use?
2. In light of the industrial area nearby, is the site well-positioned for advertising and is the council flexible regarding such?
3. Redevelopment possibilities in future?
4. How imposing is the industrial estate on the property?Other matters:
5. transport e.g. train or bus?
6. nearest schools?
7. nearby shopping?
8. any environmental pollution from nearby industrial site(s)?
9. major industrial developments planned nearby which would change present ‘ambience’?Next step get a building inspection and check for any easements.
Andrew
Pieter,
In my amateur opinion:
1. If one does not have time to look for properties which will give you a good return, don’t buy. Perhaps you can hook up with someone who has the time to look and be an investor with them.
2. I would go for houses rather than townhouses or units as land tends to increase in value and buildings tend to decrease in value. Also having land on which a house sits increases the likelihood of capital gain through redevelopment. I would prefer a suburb with increasing development expected in future due to urban sprawl and/or future transport development.
3. You are only taxed on capital growth when you have a capital gain ‘event’, such as selling the property. Otherwise, you are not taxed on the increase in value of the property.
Okay?
Andrew
