OK would this be a good solution or not….I have two properties in Adelaide, combined value 750k, want to buy another for about 350k, they are all investment properties. But I would like to avoid some land tax, if I buy the third under a company would it be a seperate entity to my other two under my name??
Also I would like to keep my taxable income down a little (fortunately its in the highest tax bracket) but if I put the third property under a company name I would only be charged at 28%(the new rate, down from 30%) opposed to paying 45 cents in the dollar ontop of my income.
I am sure there is plenty I am missing but thats why I ask you all for answers, thanks
Just buy next property in another state of Australia
if you want to access the money from the company as a dividend you will pay tax at 45c in the dollar.
Company pays 28% you pay the 45% – 28% on the original profit.
Say profit was $100 then tax is $28 company tax and $17 dividend taxHi, your question is quite straigt forward depending of course on who owns the original 2 properties. If they are in your name as the highest income earner then you may want to have it placed in your spouces name.
Companies do not get the capital gains tax offset of 50% therefore buying under a company name is a bad move in my opinion.
If your strategy is buy and hold then either pay a little more on land tax or in another entity. Depending also on how many properties you wish to buy you should consider a trust. Although land tax may apply and costs of accounting can add to the cost it does have it's benefits from an asset protection and estate planning point of view. Compare the land tax scales and make your own decision.
Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Also, a loss in the company cannot be used to offset your personal income. Best to buy appreciating assets in a discretionary trust – usually.
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
If you are already in the top tax bracket Robbo, why don't you ask you accountant about the best structuring for your situation then bounce it off the 'experts' on this forum?
BTW companies do not benefit from the CGT exemption/reduction unlike personally held assets (as per trustee's comments). I'd be considering spreading my risks interstate if the sole criteria is to reduce land tax.
Thanks for your input, I think the interstate idea is the way forwar for me at this stage
There are ways around land tax in NSW when you have properties in invidual names- not joint tenants(look at this first). Look at the family tax laws to have the names changed without stamp duty consequences, Then you can buy property at your back door again….. There are ways around everything, just keep looking and be innovative.
I agree wth above- company set up is not good.
I am afraid there is no stamp duty exemption to transfer properties (in NSW) from one name to two unless it is the pinciple residence (and would therefore be usually land tax exempt anyway), s67 duties act.
Divorcing doesn't really help either as stamp duty is only exempt if going to 2 names to 1, s68.
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
I am assuming you are a couple. That is the danger of taking advice from sites like these where all your personal details are not given. If you are a couple the above answer works, if you are single – then Terryw applies.
number8, can you point to legislation to back up your point? I beleive that is not possible in NSW.
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
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