G'day fellow property investors
This is my first post but have been viewing this forum for a while
We are about to put a desposit down on a property in NSW, and our accountant has advised us to buy in our personal name and not a Trust yet because this is our first IP and because we dont earn alot ATM. Also he said that you dont pay land tax until you get to $352K
My question is do we go ahead and purchase in personal name or a Trust (Discretionary Trust) until we reach the treshold for land tax.
The thing is i dont want to stuff this up, i want to start my Tax structure and asset protection right the first time. because like my parents it can cost alot of money to fix or can hinder your enough to get more properties in the future.
I have heard alot about Chan & Naylor Accountants are they the best to go with with there property invetor trust or just our normal accountant.
We plan to keep buying properties until we die (im 24yr, brother 20yr and dad 53yr). My goal is atleast 100 IP
Cheers
Gem Property Investments
Discretionary trusts don't get any land tax free thresholds in NSW, so owning in a discretionary trust may cost a fair bot more in Land Tax.
There are also losses to consider. Trusts cannot distribute losses, so if your property is negatively geared, and your trust has no other income, these losses need to be rolled over until they can be offset against a future profit. There are also various rules regarding carrying forward these losses.
Note being able to claim losses and having to pay more land tax may mean you could only buy one property in a trust, whereas you could afford to buy 2 in personal names.
It can be expensive to hold property in a trust initially. But as time progresses you will get more and more benefits such as reduced tax and asset protection. You have to weigh up the long term benefits against these costs.
Maybe go and see a different accountant for a second opinion?
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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