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  • Profile photo of CharChar
    Participant
    @charmaine97
    Join Date: 2015
    Post Count: 5
    May 14, 2015 - 8:55 pm

    Thanks for the replies, these are really helpful.

    Sounds like I’m definitely not getting the best deal from CBA, so I will tackle them on that. I fully understand it’s a business relationship.

    On the one bank lender aspect, I had been told in the past to exhaust one bank before moving on to another.
    Is that what’s usually done, recommended?

    I realise the loan amounts are high, but I’m earning $1.5mil+ p.a from my business in a tax effective way (30% max). The business is rock solid, a specialised professional services area with 5 partners (I’m at 30%) and 30 staff, zero debt, running for 12 plus years, turning over $10mil with 45% profit margin, growing turnover by 10% pa. I manage to save/invest 85% of what I earn.

    I’m unlikely to have an issue with non payment as my interest payments after rents and expenses (but before depreciation etc) currently total $60k p.a. and I have substantial buffers in offsets and shares outside super that would last 10 plus years without having to sell anything if my income suddenly stopped. I’m also insured to the hilt to cover health related events.

    Are there some other risks that I’m not thinking of that could eventuate?

    I was thinking it’s more about what I do in the future in terms of borrowing, rather than worrying about refinancing my existing loans.

    • This reply was modified 9 years, 6 months ago by Profile photo of Char Char.
    Profile photo of CharChar
    Participant
    @charmaine97
    Join Date: 2015
    Post Count: 5
    May 13, 2015 - 9:26 pm

    I own 10 investment properties across 3 trust structures (with assessed land value of $3.8m) in Victoria and pay about $25k p.a. in land tax. It would have cost me less if they were spread across 2 individuals and some trusts, because of the trust surcharge, but a hell of a lot more if they were just in one trust.

    Essentially,$1 million in land value as an individual is the same land tax as $600k land value in a trust in Victoria.

    If I had my time again, I would have done this:
    $1 mil in my name,
    $1 mil in partners name,
    $1 mil in SMSF (land tax is the same rates as individuals),
    Then start with adding $600k in each trust, but no more.
    This would have only cost me circa $12k a year in land tax for $3.8m. My problem is I let my trusts get too high, when I should have started new ones – very short sighted, save $1,200 in set up cost and some hassle for each new trust, but then pay much much more each year on-going.

    Also, never, never use joint names- it stuffs up your thresholds.

    What I’m doing now is buying future investments in my own name or SMSF to stop my land tax from getting excessively high.

    Profile photo of CharChar
    Participant
    @charmaine97
    Join Date: 2015
    Post Count: 5
    May 10, 2015 - 11:56 pm

    Thanks JacM,
    That’s what I thought it looked like when I read OSR site as it was silent on any other exemptions, but was hoping otherwise.
    In Victoria, a SMSF (and yes I have a Corporate Trustee) and a Unit or Fixed Trust (if the unit owners are individuals) don’t pay the trust surcharge (i.e. lower threshold or higher rate) as the beneficial owners are non discretionary/identifiable, unlike a family trust. I understand it’s the same in NSW and was hoping for that in QLD too.
    This is the first time I have considered buying interstate, I have found that the Land Tax rates vary so much by state that you really need to be careful with the structures and plan it out several purchases ahead.
    For example $600K, ends up with the following land tax by state and structure.
    Entity: Queensland, Victoria, NSW
    individual: $500, $975, $2788
    trust*: $5700, $2938, $9600
    *Individual rates apply for SMSF & Units trusts in Vic and NSW
    Then it just gets crazy if you are looking at over $3mil.
    I’m looking at buying a block of units so its hard to not end up with a large land value in a single entity.
    Land tax is such a dodgy wealth tax and I hate the idea of paying it. In hindsight I should have spilt my properties in Melbourne across more trusts (and even in individual names) as I am probably paying $10-15Kpa too much in land tax as a result. I don’t want to make this mistake in QLD.

    • This reply was modified 9 years, 6 months ago by Profile photo of Char Char. Reason: typo
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