Hi HM

I am a tax lawyer rather than an accountant and this is more an accounting question but will have a crack since no one else is.

It is probably your justification for the chosen method that is more important than the method itself.

You could split bedrooms

You could split water & sewarage via bathrooms

You could split rates according to land size if it is being charged on that, if a higher rating applies because of the studio then maybe it is split according to one of the ways above.

regards

D

I would not strata and then hold.  You will paying a lot more in rates.

I am currently upgrading the wife's Kia Grand Carnival, to another Kia Grand Carnival.  I like changing cars personally, but with 5 kids finding vehicles that fit us and all our accompanying crap in is fairly limited.  It is either the grand Carnival or the Chrysler equivalent.  Tarago and Odessey have too small boot space.  

D

Yep, this guy goes to tight assity

He owns half of Stones Corner, half the industrial area of Coorparoo.  He was also one of the first to develop the farmland around Hemmant into Commercial when the Gateway Bridge was being built and still owns some enormous facilities out there.

He has been wearing the same clothes for ever.

He drives an old, old ute.

Although he did lash out on a second hand rav 4 for his wife probably 10 years ago

If you ran in to him in the street, you would think he was an OAP who was really down on your luck.  Hell of smart guy, drives his wife and his kids absolutely nuts with his tightness.  He could probably blow $10k a day and still not outlive his wealth, he wouldn't even blow $10 a day.

One old boy I know, who has 10's of millions of commercial property, probably more.

His advice was to always pay down one.  Your own house first, then your oldest IP and so on.  This guy has been buying investment property for over 50 years.  The problem is the tight old bugger won't spend any of his money.  He'll be dead in 10 years.

Most Councils have an online mapping tool that you can subscribe to or sign up and pay a casual use with a credit card.

Brisbane City Council for example uses eBimap.  Will cost you $30 for 24 hours use and not only can you find the owners name, the maps will tell you

-zoning

-location of fire hydrants/ sewers/ waterlines etc

-easements

-waterways

-contours

-protected trees and land clearing restrictions

-rates costs

-land value over time

-previous transfers, purchase price and previous owners names

Check them out

regards

I know 2 of the cash flow positive property companies that are being sued at present (I am not involved) for selling cash flow positive stuff which was not.  When it gets to the filing it court stage, the information becomes public and I can give neames then.

Many of these we look after the buyer to only find the best cash flow positive propertie type companies are marketing companies that get paid a fee by the seller not by you.  A buyers agent on the other hand is working for you, and will be less than the $10-$20K that the marketing companies are being paid.

D

As well as the flexibility of a trust, there is asset protection.

If you own the shares in the company in your own name and you get sued or get into financial trouble, your shares are an asset that is available to creditors and bankruptcy trustee etc.

If you are a beneficiary of a discretionary trust you have no proprietary interest in the trust, creditors can't get at its assets.

If you must use a company or a unit trust, holding the shares or the units through a discretionary trust will help with the asset protection.

if you set it up wrong, the entities may be considered your alter ego and the court will take the assets in them anyway.

good luck

D

I am a fan of trust structures in the right circumstances, NSW land tax on non-fixed trusts is a bit of a pita though.

I utilise trust structures extensively in my own developing, investing and business areas.

Also recommend various structures to clients.

I also come across people who are having huge benefits from structures when I am involved in civil litigation and also when helping clients through bankruptcy and liquidations.

When representing clients who have been wronged in the commercial litigation I do, there are 3 key stages in working out the likelihood of success and the structures of the people we are suing is a key to one of them.

1.  Who is liable for damages

2. Are the damages substantial enough to cover the costs and stress of litigation and has client done enough to mitigate losses.

3. If we were to get a judgment, who is going to pay and have they got the capacity to pay.

So in an imaginary case that we have multiple parties at fault on the other side.

1. People who did stuff in their own name and who have houses registered in their name (Highly likely to have to pay)

2. Company with no assets and limited paid up capital (Will not pay and go into liquidation).

3. Professionals (Professional indemnity Insurance will cover but also likely to fight harder)

4. Trust with corporate trustee (trustee is personally liable for debts but indemnified out of the assets of the trust if it has enough, would have been better if it was a personal trustee.  Overall dubious as to ability to pay, but you never know your luck)

Guess who is going to be stuck holding the baby so to speak.

As well as the flexibility for taxation and income sharing purposes, I always think of proper structuring as asset protection insurance.  You might never need it, but you'll be bloody glad you have it if you do.

regards

Hi

Welcome to the forum,

Don't forget depreciation. A depreciation report will help maximise your deductions.

Trust type depends greatly on state property is in.  Using a discretionary trust in NSW at the moment will make your land tax bill wipe out the cashflow.

In a unit or discretionary trust structure, you can not get at the losses personally,  you distribute profits.  If you are not an employee there can be ways to make use of the losses in a trust.

D