Hi i was looking at a particular investment that says its a tax advantage of 100% for five months. What does that mean?
k
Dunno. What sort of investment was it?
Terryw
Discover Home Loans
Mortgage Broker
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
Its a property trust. Does it mean the tax is already taken out of it before they pay it monthly etc. What do you think of property trusts and what are the risks involved. I have heard this company has got a good reputation and obviously i will do my homework first but i am curious as to what others think on property trusts.
k
Sorry Lei, I don’t know much about proeprty trusts!
Terryw
Discover Home Loans
Mortgage Broker
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
Originally posted by lei:Hi i was looking at a particular investment that says its a tax advantage of 100% for five months. What does that mean?
kIt means you won’t pay tax on the first 5 months income. This would be becuase there are tax deductions that you can claim against your income such as depreciation allowances
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.auHi,
Property trusts are a good way to earn income off property without having to fork out a lot of money.Generally you can get in for $10k and earn 7%-10% income. The good thing about this form of investment (as an income generator or cash holdiing place) is it is backed by real assets (unlike debentures for example).
I think if you’ve got a stack of cash laying around waiting for something better to come along a property trust isn’t such a bad place to put it.
I’ve only gone through listed property trusts however so I don’t know what the liquidity is like.
Surrey.
Hi and thanks for your input. I am as green as they get and so can you explain to me what you meant by debentures and liquidity. Theres a lot of lingo i dont understand and so am not quite ready to enter the game of investing. Thanks again for your help
k
Hi,
By liquidity I mean how easily you can get your money back out. For example a bank transaction account linked to an EFTPOS type card is 100% liquid. At any time day or night you can get your money out and use it.A house on the other hand will take at least a month or so in the best case scenario.
Shares listed on the stock exchange for a large property trust like Macquarie Office for example would probably take a working week to get your money and so on.
The concern with property trusts that are not listed is that they have a smaller market and it may take longer to sell your units (or shares) to get your money back out. Not a problem if you are using the funds to buy a house as that transaction takes months to complete.
Debentures are essentially shares in a loan made to a business (or businesses). A property trust often raises money to buy property by:
1. Selling shares in the property which then return rent.
and/or
2. Selling debentures on which the trust will pay interest.The property shares tend to be backed by first mortgage and so are generally more secure (if all else fails they sell the property and money is returned). Debentures on the other hand tend to be second or third in line for a payout (banks come first). As a result they usually pay a good dividend.
Debentures are often less liquid than shares in a property trust because they represent a loan and the trust is probably using your money for something so you have to sell your debentures to another investor or wait until the maturity date and the loan is paid out. Shares represent a chunk of the actual business so are generally easier to sell and trade.
NOTE: this info is reduced to an essential level, different shares and debenture arangements are available.
Thanks surrey. The company has open investments which is what i was looking at.They have say 12 propertys in retail 16 in industrial etc. What did you mean by listed property trusts.
k
Thanks for all your input. I have asked the company about when i can get my money out. Turns out only once a year and that is at the end of the year also one of the companies the investors cant take thier money out now because thier putting it on the share market.
k
‘Listed’ simply means that the property trust is available for trade through a stock exchange and usually means the investmenet is more liquid. This just means there are usually more buyers and sellers willing to trade at any given point in time.
Robert Bou-Hamdan
Mortgage Adviser
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