My cousin and I want to form some sort of partnership and purchase properties together. We want to set it up so that:
a. It does not affect our current income (be both work)
b. It does not affect our current properties we own
c. It has the minimal outlay for us.
We are not sure about partnerships, companies or any other structures that could work. She lives in WA and I live in QLD. We hope to purchase across both states.
Can anyone advise?
Cheers!
tanjaa wrote:My cousin and I want to form some sort of partnership and purchase properties together. We want to set it up so that:
a. It does not affect our current income (be both work)
This question doesn't make sense.
How do you think it affects current income or are you referring to assessable taxable income?
tanjaa wrote:b. It does not affect our current properties we own
This question doesn't make sense.
Are you referring to colaterial . – if you have a trust set up with a company LTD PTY controlling the trust then if you put enough cash into the company you use this cash as the deposit.
However as a director of a company you may need to personally guarantee the amount borrowed by the company .
tanjaa wrote:c. It has the minimal outlay for us.
Setting up a company costs money and then the tax return costs money. Having enough money for the deposit.
You should consider a partnership agreement drawn up with a lawyer
Trust structure – set up with accountant.
We are not sure about partnerships, companies or any other structures that could work. She lives in WA and I live in QLD. We hope to purchase across both states.
Can anyone advise?
Cheers!
[/quote]
Hi
I think your questions make sense. You use the term partnership in the general sense, though what you end up doing may be different in the legal sense.
You could do it 3 ways
1. A unit trust.
This is a trust with units (simmilar to a company with shares). each person holds 50% (or whatever) of the units.
All profits would be distributed to unit holders in accordance with their ownership. Simple to set up2. Discretionary Trust
This is a trust where the trustee makes the decisions and can allocate profits as they seem fit. This may be preferrable as they can send the profits to the lowerst income earner to save tax. Profits can also be diverted to family members.Potential problems is that the profits may not be distributed evenly between the 2 people. This can be gotten around by using a unit trust with each unit holder having their own discretionary trust own the units.
Discretionary trusts offer asset protection if you are personally sued.
3. Company
This is a separate legal entity so give you some asset protection (if company is used) and the shares can be evenly owned by the 2. It is flexibible too.You can also have a separate discretionary trust own your shares so the profits can go into the trust and then to the lowerst tax payers to save tax.
4. Individuals as joint owners
This is the simplest, though the least flexible.there are lots of issues with finance and you need some careful planning.
I suggest you read up on each of these structures and get a good idea before you go and see an accountant.
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
Thank you so much, Terry. You have given us exactly the answers we need. We will certainly look up the different structures and see our accountants.
Thanks for your help and 'being in our head space!'Cheers!
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