Tax implications?

Jenny,

Sorry, needed to clarify my previous answer regarding buying commercial property about Q1 and 2.
While you can purchase the serviced apartment with your own name (ie without ABN), however, if you cannot produce an ABN , you will be charged a higher withholding tax when your tenant pays you rent – to which you will need to claim back when you do your tax return. (similar to banks withholding interest if you don’t produce your TFN). So it maybe more efficient if you use ABN and registered for GST (if the lease contract contains GST).

I suspect you will quote your ABN number in the contract of sale?

Cheers,
Kenny

Please note that comments posted on this forum are of general nature. Please obtain appropriate professional advice before taking action.

Jenny,

1, Yes, you will only have to quote your ABN when you purchase a commercial property. It is not a necessity to have ABN or GST for residential IP. A simpler way to think about it – if your tenant is a business, you are likely to require ABN. (There are exceptions)

2, No, GST payable is dependent on your vendor, not you (ie, if your Vendor is a business registered for GST).
In any case, GST will be inclusive on the agreed price.

3, I know it may sound confusing, however, you should think of it as 3 completely different entities.
a, Jenny – the individual, with TFN
b, Jenny – the sole trader, with ABN / GST (same TFN as Jenny the individual)
c, Jenny – the trustee of Jenny Family Trust (can register for separate TFN and ABN)

You are can purchase residential property under any of the 3 entities.
When you purchase a residential IP with one entity, you are not required to cross link it with another entity, unless you need to be a guarantor (eg when you buy property with family trust, you will not be required to quote jenny the sole trader ABN, and you should not.
In this case, you are buying the property with the trust, which has nothing to do with Jenny the individual or the sole trader.
Think of you as an employee in a Company ABC, when you use the ABC’s money to buy a printer, you do not need to let them know Jenny’s sole trader ABN)

It is not my intention to give personalised advice on this forum. While I would like to help as much as I can, you need to understand that accountants need to meet a certain level of duty of care, whether the advice given was paid for or not. Professional Accountants study many years to specialise in this field and charge a reasonable price to be compensated for that risk (amongst other factors). I will be doing these people and myself an injustice by giving out free personalised recommendations here, where you cannot ascertain if the advice given is reliable or not. I hope you can appreciate that.

So my recommendations is still, find yourself a good Tax accountant who is knowledgeable in Properties. Not only will they be able to answer your questions, they can be proactive in tax strategies and plan with you – while you concentrate on investing!

Do keep asking questions, and contribute with your investment experience here, but please address it to everyone, so everyone has a chance to contribute.

Cheers,
Kenny

Hi Jenny,

Thanks for that! Glad to know I’ve helped.

There are pros and cons with different structure when it comes to purchasing property investment, understanding the application and advantages will serve you well in your journey of property investment!

Personally, I have stayed away from serviced apartment and student accommodation myself, even though they give great guaranteed rental return.

With regards to books, I’m not sure if you have heard of Julia Hartman. She’s the resident tax expert for the “Property Investor” magazine. Apparently she has written a book “Saving Tax On Your Investment Property”. I have not read it yet, but I have been consistently impressed with her work. May be worth a look?

Best of luck
Kenny