Hi Everyone,
Quite a few "which entity structure should I use" questions on the forums lately.
Thought I would share a basic guide (in draft) that I use with some of my clients and a prompt for my own thought processes.
I am thinking about making this more public and would appreciate any feedback. Is it too complex? Is it missing something?
Would love a mortgage broker's opinion on what the lenders generally think about different entities.
Hopefully it is a useful starting point in deciding which entity to use to purchase an investment property.
A traffic light principle is used, so if a particular category is vital to your investment strategy (i.e. negative gearing or low setup costs) you would select an entity with a 'green light' in that category. There are some broad generalisations, however it is a starting point.
Let me know what you think
http://kohlhagengroup.com.au/wp-content/uploads/2012/10/Structures-101-Property-Investors.pdf
Cheers
Richard
G'Day Richard,
Excellent doco. The setup costs of SMSF's are certainly costly but I wouldn't say that the ongoing costs are expensive.
When it comes to the entities – the 2 big ones are probably Hybrid Trusts and SMSF's. CBA have a terrible SMSF product whereas other lenders have quite good products. Re Hybrid Trusts – there are a lot of lenders that simply don't lend to Hybrid Trusts whereas again NAB will lend up to 95%.
What was the reasoning for having a 'Professional Image' row?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Thanks for the feedback Shahin,
I've labeled SMSF has expensive, more so relative to the other entities. SMSF accounting and tax returns are often more complex and require an independent auditor by an approved auditor which all adds to year end accounting fees. Also I believe SMSF trustees are more likely to need ongoing advice to stay compliant with the SIS Act.
Thanks for the info re CBA & NAB, I'll likely try and add a "Bank Headache" category I think.
Professional image is often not a priority for investors. Professional image is more for business investors, who might be developing regularly or seeking a brand image down the track. Professional image can also factor in a tax office view of what operations are being carried on.
Thanks again
Richard
Richard,
Maybe add something about the land tax as this varies from state to state. In NSW for example there is no tax free threshold for trusts at all – only some relieft if fixed unit trusts.
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
Good point Terry. Land tax line is currently for SA, think I will have to overhaul that line state by state.
Much appreciated.
Hi Richard,
I am very interested in your information;
unfortunately I get an error the document I am looking for does not exist.
has it been removed?
cheers
Ritchie
Hi Ritchie,
Thanks for your interest. I have taken the document down for now.
If you would like a copy please send me an email and I will forward you a copy.
Cheers
Richard
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