Hello everyone,
I would appreciate if anyone could please help me with this question or advise me of anyone that could. I apologise in advance if this doesn’t make sense.
Recently watched an interview with @stevemcknight and it mentioned he was drawing the profits from his accounting company to use as deposits for property, while personally guaranteeing the debt. Would the profit from the company be taken to boost the individuals pay to allow them to personally guarantee a larger debt and increasing the borrowing capacity. Essential paying yourself all the company profit.
Or was this in regards to Steve purchasing property under his company name.
I understand the negative side of this as the personal tax rate will be bigger, but I feel the trade off to grow a large portfolio quickly is worth it.
thanks
Another solution would be to pay myself less thru the company, then see if the bank would accept an “add back” of the company profit (taxed at a lower marginal rate).
I should also mention, I am the director of my own Pty Ltd company, so I have the benefit of being able to allocate my funds before they’re fully taxed.
Thanks againHi Justin,
There’s a lot to learn, eh? Good that you are asking before doing. The earlier topic you started – https://www.propertyinvesting.com/topic/5070041-structures-for-larger-positively-geared-portfolio/ – only touched on the subject of “how” to structure things, and Steve’s new offering in that space is still a wee way off.
BUT, if you read (and reread 4 more times) Chapter 9 of the updated “0 – 130 properties” book, Steve provides quite a LOT of detail re his structuring. I recommend that book to you as a starter. After that, run his thoughts by your favourite accountant/lawyer to have them answer any questions that your situation might invoke.
Benny
-When you own a company or control a discretionary trust the lenders will generally take your income and the company’s income into account. It won’t matter too much whehter the income is $100,000 in the company and $0 in your name or $50,000 each. It all adds up to the same. With trusts it can vary from lender to lender. Some will refuse to take the trust income into account if it is not being received by the applicant, even if the applicant controls the trust. Others are more flexible
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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