How to structure myself for a Buy/renovate sell stratergy?

Morning all,

Cheers
NOS1

You should probably look at using a discretionary trust as there are more possibilities of reducing tax. Or Maybe a company with the shares owned by a trust.

Another thing to consider is finance. Will you qualify if only working part time. It will be approx 2 years before self employed business income is taken into account.

Terryw
Finance Broker
Solicitor

Thanks Terry,

Do you know what the associated costs are setting up a trust or company?
In regards to finance my partner is on a good income, so I'm hoping that will help obtain finance.
Would you recommend borrowing as much as possible to finance or use as much of my own cash to taken on project.
I appreciate your advice.

Thanks
NOS1

NOS1

Probably allow $2000 for an Accountant to set up a Company and DFT structure.

Remember to take your partners income into consideration for financing they will need to be a Director / Trustee and this may not be ideal for complete Asset protection.

Obviously whilst interest is a deductible expense when used for developing using your own cash will produce better net results. Balancing item is of course whether you can use the cash elsewhere to obtain a better return i.e offset any non deductible debt.

Finally remember most lenders will consider your activity as a business and will probably want to pass you over to the Development / Commercial side of the Bank.

Your Broker should be able to come up with a solution although appreciate that his / her commission will be clawed back if you sell the property within the first 18 months.

I have several clients that do exactly what you are doing and we charge a fee per deal for them with both parties knowing that there is no net commission paid so dont expect us to work for nothing.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

Trusts cost from around $200 on the net if you do it yourself. Accountants may charge around $1000 with some advice and apply for the ABN and TFN for you, and GST registration if needed. On top of this you need to add stamp duty in most states - nil in QLD i think, but around $500 in NSW.

Company registration costs $400, approx for ASIC fees and an accountant will add a bit on top for advice.

It is worth paying a bit more for the advice as you can easily stuff up if you get it wrong.

It is best to use one director or one trustee, (if not using a company). As there is some risk involved you should probably use a company as trustee.

You  may still be able to use a spouse's income for servicing if they gain a benefit from the loan. being a spouse is often enough, or the spouse can be a named beneficiary in the trust or a sharehold of the trustee company.

It is probably best to borrow as much as you can and keep your cash for emergencies (ideally in an offset).

Terryw
Finance Broker
Solicitor