Hi folks,
I'm about to begin my investment career and would like to get things set up properly. I was wondering if some people could suggest a good entity structure for me. I saw an accountant but I felt the young kid behind the counter didn't really know what he was talking about and wasn't a property investor himself so I didn't find him very helpful.
I am a single guy with no kids and no siblings. My immediate family consists of just my mum and myself. I also have an uncle, aunt and 2 cousins aged 14 and 12.
My main objectives are tax minimisation and asset protection. I am focused mainly on a buy and hold strategy of positively geared real estate, but I may also buy, renovate and sell too.
I know I could set up a trust, but with few options for beneficiaries I don't think this will be all that helpful.
Thanks in advance!
The most common and usually most suitable structure is to hold the properties in a discretionary trust witha corporate trustee. You can have the beneficiries named as any future spouse and future children, as well as your mother.
You could also have your cousins, uncle and aunt named as secondary beneficiaries but I would be reluctant to do this at this stage. If you do become super successful and want to share your wealth with these family members then you could name them in future trusts but it is your decision really what you want to do with your money.
There are also clauses that exclude any future ex-spouses of your children, and maybe even ex-spouses of yourself to give added asset protection but whether or not these clauses stand up up in a court if there is a dsipute is another question.
In any event, it is best to see a well qualified and more importantly experienced lawyer and accountant to set up the trust or any entity you use. You could DIY for cheaper but this may end up costing you a bomb if it is not done propertly.
It is probably also an idea to talk to a mortagage broker to make sure you can borrow money to buy the properties using the proposed structure.
Cheers,
LukeDepends on a number of things.
What is ideal from a tax point of view my not be ideal from an asset point of view or land tax or stamp duty etc.
Some things you could look at:
Individual – get the CGT exemption if main residenceDiscretionary trust – greatest flexibility, but not able to use any losses to offset your personal income and will pay more land tax in most states.
Fixed Unit trust – may be able to borrow to buy units and claim interest, may get land tax threshold. No asset protection. But may be able to move units to a discretionary trust later on with no stamp duty.
Company – not recomended for tax reasons (unless acting as trustee).
Also consider finance – hardest is the unit trust.
Also consider succession – if you die trust assets don't form part of your will
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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