Hi
I am a builder and are looking to start doing some renovations and developments in Perth. Does anyone know if it is better to hold the properties in the company name or in our own names?
Thanks
IainIf yoiur a developer it’s better to put it in a company name. This will reduce your lawsuit exposure. Also since you developing you are considered to be trading stock (rather than just buying and renting out, etc) and you get some very nice tax benefits, so I would recommend a company.
I would see an accountant who specialises in taxation for developers (as opposed to a regular accountant).
Rgds.
Lucifer_au“and you get some very nice tax benefits”
this might be a case of the grass being greener…. the main difference is that because you are trading stock you no longer qualify for capital gains tax concessions – it is all income. Definitely see an accountant because trading purely within a company may be a bit restrictive.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
I Would still use a trust with corporate trustee. You owuld still wan the flexibility of distributions even if you cannot get the CGT discount.
Terryw
Discover Home Loans
North Sydney
[email protected]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
After 8 years of property developing in Brisbane I agree with Terry (as if often the case).
Trust with Pty Ltd Trustee is the only way to go.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Company tax rate of 30% plus paper work of gst etc if it earns over 50k per year. Look at your marginal tax rate and compare. Also I believe there is a ruling on holding onto the property for 18 months. If longer, its treated as an investment, if shorter, it’s like a company and you get hit with more CGT. I strongly advise talking to an accountant about your financial structure. What you intend to do has legal consequences. You might want to look at trusts too.
good luck
dd
What are the implications of selling if I hold a property a Trust (Descretionary)
Thanks,
MikhailIf you hold under a trust structure, any profits/gains could be distributed to low income earners who may pay little or no tax on the income/gains. This money could then be gifted back to you.
Terryw
Discover Home Loans
Mortgage Broker
[email protected]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
Hi All,
Just a thought, but we have them from time to time. How about the best of both worlds?
Buy the property in a trust (with a corp. trustee. The trust is to be discretionary make sure of it). One of the benficiaries of the trust could be a company.
The method in the madness- By distributing profit (a trust “must” distribute all profit) to a company you enjoy a flat tax rate of 30%, plus franking credits, plus the flexibility to distribute elsewhere (people), should circumstances permit.
The one catch is in a “closely held group” there must be a physical cash must flow. Not just an accounting adjustment. However this can work with a loan back to the trust (from the company). Inerest bearing.
Ok from here on I would say you’re armed with the right questions and thoughts, go find an appropriate accountant(s).
Please don’t forget, you are taking on a project that has BIG tax saving if done correctly. Pay an accountant, we’re worth the 6+ years we studied for. We don’t just charge heaps for the fun of. Last peice of advice, use the service wisely, they are your advisor, not your book-keeper. Keep smiling and good fortune.[biggrin]Cheers,
Nath
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