Hello,
We have 2 investment properties bought under our own names. We also have a registered business (for share trading) complete with ABN and TFN.
Would it be better for us to purchase under this business or another entity as opposed to under our own names? Are there benefits of one over the other?
Any advice greatly appreciated.
Karl and Rita
The only thing that limits us…is a limiting belief.
If you are buying +CF properties a trust. (15% discount on CGT, plus adds extra layer of protection from lawsuits)
If you are buying neg geared prop. a hybrid trust.(see above + can still offset tax losses to other personal income).If you will be buying allot of CF+ or neg. geared properties use a corporate trustee (a non-trading company runs the trust, you own shares in the company). This will add a further layer of asset protection.
If you are doing a wrap you cam use either a company or a trust (as the tax situation is the same for both entities (i.e. no CGT due to “emerging profits + trading stock”, rather all profits are seen as income) .
Rgds.
Lucifer_auIn terms of which is better… I would keep them seperate, otherwise you could ‘taint’ the proeprty trust with the share trading. Also if someone slips up in your property they can’t get your shares!
Rgds.
Lucifer_auWhat do you mean by Business? If it is just a business name, than you cannot buy property under this. If a company you can, but it would certainly be better to buy a property using some sort o trust.
Lucifer – what do you mean that trusts get a 15% discount on CGT. It should be 50% discount for assets held more than 12 months.
Terryw
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Originally posted by Lucifer_au:If you are buying +CF properties a trust. (15% discount on CGT, plus adds extra layer of protection from lawsuits)
If you are buying neg geared prop. a hybrid trust.(see above + can still offset tax losses to other personal income).If you will be buying allot of CF+ or neg. geared properties use a corporate trustee (a non-trading company runs the trust, you own shares in the company). This will add a further layer of asset protection.
If you are doing a wrap you cam use either a company or a trust (as the tax situation is the same for both entities (i.e. no CGT due to “emerging profits + trading stock”, rather all profits are seen as income) .
Hi Lucifer
I think you’re getting a Discretionary Trust mixed up with a Superannuation Trust insofar as the 15% CGT discount is concerned.
Also a Hybrid Trust does not allow you to mix (offset) personal income with the Trust Loss – unless you mean that the borrowing is outside the Hybrid and hence the Trust is +’ive income at the point of distribution.
I also wouldn’t be too concerned with the ‘income tainting’ issue, and as for tenant claims – that’s what you have insurance for.
There are also tax differences between a company and a trust. Your statement about doing a wrap thru either structure and not making a difference (presumably in the tax result) has me confused.
I agree that the profits (from a wrap) are most likely to be income, however it would be unusual for all the trust beneficiaries to have (exactly) a 30% average tax rate and therefore have the same tax consequence as the company.
Can you shed a little more light on what I’ve missed in what you said?
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