Hello! Hello! Hello!
My brother and I are looking to invest in our next property investment.
I have read numerous articles and books about how to structure a property portfolio, however, I’m still unsure whether I should buy my next property under a trust or still in my personal name.
I’ll give you a quick rundown on where I’m at:
– Existing investment property – bought in both mine and my brothers name & is currently negatively geared.
– Next potential property – looking to buy as a positively geared property
1. Going forward is it best to start looking at setting up a trust and if so is there anyone who could provide suggestions on how OR recommendation someone who I can speak with based in Sydney?
2. What are the average costs to set up a trust should I choose to go with that option?
Keep in mind, by buying properties together you’re both going to have drastically reduced borrowing capacities if you ever borrow separately for anything – including a personal place of residence (your own home).
Trusts have a place, especially if you work in a highly litigious industry – otherwise it can be overkill, leaving you additional costs for minimal if any gain.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
I am a lawyer based in Sydney specialising in trusts and I charge $1650 to set one up including legal advice.
I can save you some money and talk you out of using a trust by asking one question – or 2 actually:
Will you be buying in NSW? and, if so
Are you prepared to pay 1.6% per year in land tax?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 the property costs more than $462,000 (2016) you will be required to pay land tax ($100 + 1.6% up to the premium threshold). However this is deductible and should be taken into account when working out your figures to ensure the property remains positive cashflow.
If it does, then this can be distributed to yourselves personally and may in some way offset some of the negative gearing you already have. If you are undertaking the negative gearing exercise because your personal income thresholds are on a a very high level, then perhaps distributing from a trust to a bucket company (30% or less depending on your circumstance) may be another option.
It depends largely on your personal situation, long term goals, and whether you feel there is risk associated with any of the activities you are either undertaking or already exist in your normal job/life (if you think risk is an issue, consider using a trust).
Wayne, its not the price of the property that determines land tax, but the value of the land. And it is $482,000 for 2016.
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
Thanks, Corey, Wayne & Terry for the help.
The properties I’m looking are in NSW, valued well under $400K and in Tasmania again well under $400k.
Terry, I will contact in next couple weeks.
Thanks again.
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