Hi there,
I am considering using the equity from my first (and only) IP to purchase my second IP. I estimate that I have approx $150k in equity from the IP.
As I am considering taking a more active role in property investment, I would like to know if I should set up an Australian ABN or if there are any other appropriate structures (eg. Trusts) that I should also be considering. If so, what are the advantages or disadvantages of each structure from a tax perspective.
I am also keen to hear about other resources I can tap into to help me gain more knowledge about property investing. There is so much information out there to sift through!
Adrian
Hi adrain
Firstly welcome to the forum and I hope you enjoy your time with us.
When you state that you intend to become more active is this because you intend to be buying and selling or merely try and increase your portfolio.
The reason i ask is because the way you structure the funding and the entity which you would use to purchase these properties will depending on the strategy. This in turn will determine whether you need to are required to register for an ABN and or GST.
With a little more information about how you want to go forward a suitable answer can be provided with supporting advice.
Richard Taylor | Australia's leading private lender
Hi Adrian, Based on my Accountant's advice, I have just set up a DT myself.
I'd say if you were to get into it property game seriously, setting up a trust it is the way to go. For instance, if you buy more than 3 properties or if you have a large portfolio of properties.Short term hardly any gains in setting up a trust, long term it will give you:
flexibility in terms of income splitting.
It will reduce the litigation liability.Otherwise keep it simple.
I would only set up an ABN once you can clearly see the advantages of using a business name. I don't think ABN gives you a great deal of TAX claims as appose to personal tax returns.I would only registers for GST; once I reach the threshold that is set by ATO, otherwise why create more work for yourself?
Start small and think big. Plan now and go with options that gives your more flexibility in the long run. This form is great as source of information. Good luck.Sulo G
I would recomend setting up a discretionary trust too. Do some research on these.
Setting up an ABN for property investing has no effect on tax claims. You only need an ABN if you are running a business. GST only applies to businesses turning over more than $75k pa. residential property is not affected by GST either.
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 everyone,
Thank you for all the advice. I will certainly conduct research on the advantages of setting up a Discretionary Trust.
Richard, in response to your query, I am considering increasing my residential portfolio at this stage. I am not intending to purchase commercial property for the moment.
Adrian
Ok Adrian wouldnt necessarily need an ABN then however if you purchase the properties in Trust you might wish to make appication for an ABN.
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
