Up till now my wife and I have been just adding our property income to our regular income for tax purposes.
When we retire (we will have paid our loans off) and will be receiving $215k per year prior to expenses/taxes/costs.
Take out $40k for property expenses.
We only need $60k to live (ok maybe we need $80k) per year.
Is there a smarter way to pay ourselves a salary from the income of $40k each (less tax).
And the surplus funds stay within the business. That is they go on a home loan or money in the bank saving for a deposit on our next property.
What is the best way to structure this, to save tax?Are you running a business? separate entity?
If not you cannot pay yourself a wage.
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 have a commercial property you could consider moving that via in-specie super contributions into your superfund (if you have a SMSF). If you have a switched on accountant they should be able to come up with a strategy to move it in a tax effective way. Once in a SMSF, if you are in pension phase, the income on the property will be tax free. Depending on your age, pension withdrawals will also be tax free if you’re over 60.
Else, depending on your current business/ tax structures, you could consider making super contributions to offset the rental income.
There are a few options when it comes to buying new properties, but you need someone who has a knowledge of your affairs to advise you if you are unsure.
Cheers
Ohh I should have mentioned I am 29. So no where near retirement.
Can I run a property investing business? Why not?
My parents used to pay themselves a wage and keep the profits in their business (plumbers). Why can I not do the same with a property business?-
This reply was modified 9 years, 6 months ago by
vyaw2003.
You cannot contract with yourself and your cannot ‘retain’ profits – you make money, it is yours.
If there was another entity then it could pay you = spouse, trustee, company etc.
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
yeah so this may be worth while changing this all over.
move all my property to a trust, then pay a salary, then all profits will remain in the trust, and will only be charged at the lower tax rate?
Does that sound like something that i should investigate?CGT and stamp duty on the transfer. new loans.
And trusts cannot retain income without paying top tax rate.
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
so how can a plumber pay themselves a wage? What is the difference?
They can’t. But a company they may control could pay them. Why do you want to pay yourself a wage? This is taxable in your hands. If you have a company that owns property and it pays you all the rent it will be the same, income wise, if you owned the property.
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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This reply was modified 9 years, 6 months ago by
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