Forum Replies Created
– Can I form a company and purchase investment properties through that company?
Short answer is yes. Long answer is, you probably don’t want to. There are so many aspects to this, and much has to do with what the future holds for you. Something you can only partially predict.
You could look at purchasing in a trust, more specifically a hybrid trust – first order of the day would be to get yourself a good accountant. Yes a bit expensive to start off, but worth it in the end. A hybrid trust can be more tax effective than a company.
I also know some accountants that say – at this stage of your investment career, it is not worth it, and you should just buy in your name. I would actually agree with that.
– If I can, will all tax payable be charged at company tax rates?Yes, but also remember you can only claim deductions at that rate as well.
– Are company tax rates less than personal tax rates?Company rates are 30%. Only you would know whether your rates are higher or lower.
– If I want to contribute money from my salary into the company to provide funds with which to invest, does the company have to pay tax on the money I give it (effectively meaning I’m paying tax on that income twice before I can invest it)?short answer No. There are many different ways to put money into a company. For Example a) You could issue shares to yourself at a certain price. b) you could loan the money to the company.
– likewise if the company pays me some money, do I have to pay tax twice – company then personal?short answer No. a) If the money paid to you is a company expense then it is before tax. You would have to pay tax on the income. b) If the company paid you a Franked dividend (div after company paid its tax) then you would either receive a benefit if your tax was lower than the companies tax, or have to pay the difference if you tax was higher than the companies tax.
– I have never held an interest in property before. If I purchase property through a company I form, will this make me ineligible for the FHOG (First Home Owner’s Grant) if I wish to apply for it in the future, or will I remain eligible as I do not personally own the property??No -if you buy an investment house and never live in it, it does not matter what entity you bought it in, including your own name, you can still claim the FHOG. BUT no advice is given here as rules can change, and may already have, and every state may have a different opinion.
Regards
JohnInspired Finance
(02) 9944 7776Draw up a trust with family members being trustees plus beneficiaries
The 3 gift the money to the trust. ($20K each)
The trust makes an interest free(or whatever) loan to your mother.
Your mother pays out her existing mortage.
The trust can have a mortgage over the house – is not expensive overall.
As the 3 children are trustees and beneificiaries, then there is much flexibility. You avoid all the SD and divorce problems.
Of course you should talk to your solicitor/accountant or some other financial advisor
Yes you can have some legal agreement between the three children, but would not allow much flexibility. The trust would give that to you.
Regards
JohnInspired Finance
(02) 9944 7776
