My wife and I currently are directors of a PTY LTD company, that in essence has ceased to trade.
We are turning to more property investments, including commercial and asked our accountant the best structure to implement based on our current three properties and desires to purchase at least 10 to 20 more.
The question I asked was it better to buy in the Company name or established a trust, either family or discretionary.
The answer was that as we would not own the properties 100%, we could not place them in a trust or the commpany.
Based on a recent article I read in PI a couple of months ago, I believe this advice to be wrong -but then again – I’m not an accountant.
Are there any thoughts on this situation?
[confused2]
Hi DNL,
Generally, it is not a good idea to buy property in the name of a company (that is not a trustee coy) as companies do not get the 50% CGT discount.
The answer was that as we would not own the properties 100%, we could not place them in a trust or the commpany.I don’t understand the context for this response… Yes, it is true you don’t own them, but, provided you did it correctly, you will certainly control them which is what I really desire from my structure.
My suggestion would be to seek another paid professional opinion.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Get another opinion. You can purchase assets in the trust or company.
Terryw
Discover Home Loans
Mortgage Broker
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There has to be somewhere people can go for correct advice. Surely there is a Government website that explains all this instead of palming everyone off onto “professionals” (and I use the term loosely) who seem to get it wrong A LOT!
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter: See – http://www.mortgagepackaging.com.au/index_files/newsletter.htm
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
DNL,
Sounds like your Accountant was talking about a superannuation fund as that is exactly the problem with holding property in a superfund. Maybe there was just a breakdown in communications. But regarding any you do own outright and don’t mind your money being locked away until you are 55 a superfund is the most tax effective place to keep them.
Mortgage advisor – the government gets it wrong a lot more often than the professionals. Check the professionals qualifications. CPAs and Chartered Accountants have to do a degree and several years study with their professional body before they qualify. Staff at the ATO start out on the phones after a 6 week course even if they have no relevant experience before joining the ATO.
Julia Hartman
[email protected]
http://www.bantacs.com.auGreat Question, I was just about to post one asking if it is best to purchase through a business name, company name or your own name??
If any one knows the best way in terms of tax advantages/cashflow structure I’d love to hear about it.
Thanks,
CameronJulia – thanks
I was pretty specific with my question to the accountant. I did say it was for our long term property portfolio growth. I think you may be right in that the accountant assumed private super.
Anyway, it is a simple communication issue and in the new year we may establish a family trust to ensure we can move on things when required.
I have started to research trusts, and while it offers similiar tax advantages as for individuals, I think the biggest advantage comes in succession planning. It is enivitable that one day I’ll fall off my perch. By that time, I’ll have either spent the proceeds of my assets or hand them on to children. So long as the tax rules stay the same, I understand the kids won’t get hit with CGT if the asset is in a trust structure.
Anyway, more to investigate, more to learn.
regards
[computer]DNL,
The kids won’t cop CGT if the property is held in your name either. CGT only applies when the property is sold regardless of whether it is held by a trust or individual.
Nevertheless when you line up all the pros and cons you will probably find a discretionary trust is the best. Mainly because of the flexability in who pays the tax on the income or capital gain.
Another very important consideration is not being able to distribute losses to beneficiaries. This goes against trust and pro individuals. Very important these days when a really large deposit is necessary to get most properties postitively geared.Julia Hartman
[email protected]
http://www.bantacs.com.auI believe you need a new accountant immediately. One that invests in property is urgently required. Accountants are usually only good at dealing with the past. Financial planners are better at the future and tax planners best at minimizing your tax liabilities.
I don’t think one person would ever be good at all three so get yourself some advice and from more than one source.
The difference between trust, company, individual and family super company is very dependent on what you are intending to do, achieve and what you want out of your future plans.
No one here can really advise on that I am sure. Not well enough without all the facts.
Anyway, whichever way you go, goodluck and please advise us that you did move to a new accountant none the less.
Byronent
Adelaide SAOriginally posted by Julia:Another very important consideration is not being able to distribute losses to beneficiaries. This goes against trust and pro individuals.
Also pro hybrid discretionary trusts.
GP
Howdy!
There are lots of good fact sheets regarding different types of Trust structures at:http://www.sjq.com.au/sjq/default.htm
Click on “Trusts”.
Thanks Leila. Very informative.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdLeila thanks for that web site. I’ve been working my way through it.
Happy New Year
[drummer]
I realise that the majority of readers to this site will be Australian, but for any kiwi readers out there the structure for buying properties can be quite different, due to different rules with regard to Capital Gains Tax.
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