Forum Replies Created
DAZ 008
One of the best vehicles for tax minimisation is a Self Managed Super Fund (SMSF)- any income is taxed at around 15% (depending on your individual situation) and the aim of the fund is to provide long term retirement benefits for the members (primarily you, and family if / when the join the fund).
With a strong surplus from your salary you could increase your contributions into your SMSF (salary sacrifice) and still manage those investments – shares and cash would probably be the better targets although there are a number of off-market investments that can be considered dpending on your tolerance for risk – and once again these can all be run through your SMSF.
The property being residential and already owned by you – won't be able to be transferred into you SMSF. But if you sold (say as your PPOR and there was no tax) you could make a large contribution of part or al of these funds into your SMSF as seed capital to work with or equity in a property for your SMSF and get a small amount of gering say 50%.
A few things need to be considered – cashflow (if you have enough cash comming in to cover all your needs, as SMSF funds need to stay in the fund unti retirement age), risk (high risk generally needs longer terms to smooth out the volatile ups and downs – it can be hard to pick the market), lifestyle (kids, faily, costs etc…these change and are part of your cashflow – but youdon't want to dump too much into your SMSF that leaves you short and vice versa).
If you are likely to be on that salary for an extended time then SMSF will be a good way to manage your affairs – and if you don't want to do anything too far outside the box, a good managed fund in your SMSF can be a passive way to access shares, cash and have professional managers look after your investment – just pick the one right for you.
Try http://www.millinium.com.au I have been talking to them about a commercial purchase, still trying to find the property – my situation is a little different from your situation – but they have a service that enables property to be transferred in to SMSF and assist along the way and they offer access to a completely non recourse option – bth loan and structure.
A reasonable time to do as any transaction costs will be lower than when the market is running hot and yields are tighter.To avoid cgt on any sale proceeds when the property is in the SMSF, you need to be in pension phase / retirement age. So to me it makes sense to get a little gearing, drop it in the SMSF, have the rent service the loan payments and then when the market is right consider sale to access the equity available when I need it….when I fat and retired and need another cigar !
O
Maurice
Just to give you another option try MGA Accountants on the Gold Coast (ask for Mark Whitaker tell him I sent you).
Mark is a CA with an extensive insolvency background, as well as having been a business owner – something many accountants aren't or can't be. So he can relate to just about any challenge a structure or business needs in most tax environments. http://www.mgaacc.com.au/accounting#Topic1
Good luck who ever you try.
O
Mr Markie,
How did your SMSF purchase turn out ???
O
Just to throw another comment into this well supported space (RT and Evolve great posts).
Advisors to DIY funds need to be licenced under the Cooper review published recently. That means that Acct and Law's need to hold a FULL Aust Financial Services licence to establish a SMSF. Also lending within SMSF is now considered a financial product, where as previously loans were not….so the regulation important with SMSF, as the costs of not complying could be exhausting.
External trustees could be a better option – this enables the SMSF to run independantly but the external trustee provides all the updates required to the bare trust, compliance, custody and registry as well. Your SMSF is still entitled to all rights (income, capital movements) from the property, can lease and release and negotiate with the tenant, but you have less to worry about from an admin point of view.
APRA funds, are "clayton" SMSF as the trustees are outsourcing the the majority of the investment decisions so with you have a "SELF" MSF it is only in name.
The industry body SPAA is a good starting point for legislative updates.
RT – can you PM me please.
O
Commercial Property – love it !!
If you like property in general then the benefits of commercial over residential are many – I think that some people don't want to make the jump in into commercial because it is a little more expensive (accountants, lawyers, the banks gouge a little more as well), there are more matters to consider and research and the physical appearance…..funny but I know investors who would prefer a nice 3bed, 1 bath with a hedge and backyard that yields 3% rented to students , then a concrete, industrial shed that yields 9% leased to a national tenant (and you don't have to mow concrete !) – because they understand you need a house and it looks nice, they don't take the time to get into comm prop.
Important – tenant, tenant, tenant…..location slightly less important but certain locations will attract certain tenants, so it is high on the list.
Having a one tenant building is sometimes like owning 1 share – but having many tenants involves more admin (leases, renewals, rent follow-ups etc) or engaging a property manager (another cost here).
The good thing at the moment is that the commercial property market is bouncing along the bottom, which means yields are up and prices down (inverse relationship) so don't be in a hurry, kiss a lot of frogs, take a lot of site inspections, review a lot of tenants financials if you can get them….. on your side, make sure you have the cash or access to it, so when you do see an opportunity you can negotiate hard, so when the comm prop market does turn (and it will) you will reap the rewards.
Commericail LVRs are around 65%, if a company or trust is involved expect a bank to give you a thorough enema and ask for g/tees from everyone over 18 with an interest over 10%. Rates will generally be 1.50% – 2.% over the residential rate. If you looking at bank funding while Int Rate is important, consider the conditions and term as well, as these can have a more onerous effect. some banks simply aren't renewing expiring loans forcing hasty refinances or sales – your best defence is cash in terms of paying off principal or having it available to reduce the loan.
O
I use the example of the Far Nth Coast of NSW (Balina, Byron, Kingscliff) the previous business communities were centred around Lismore, Grafton, Murwillumbah for cattle, timber and farming – now these towns are feeder towns for the coastal locations. Ballina itself a once small village <8,000 now probably the central town in the area. and prices (both rental and capital) in Byron…well that opportunity has long gone.
Airlie I am cautious – tourism, transiant population, small spread of industry. Bowen I really like – close to everything, future investment from all sectors (Abbot Point etc). It is like Mackay was 10years ago.
A decision like Xstrata putting their projects on hold due to Super Tax can delay jobs, delay investment – if this happened in a sole industry town then it would be like BHP pulling out of Broken Hill (exagg but you get the point). It would be interesting to see a 10yr graph of coastal properties prop prices in comparison to 50klms from the coast – I would guess constant growth as opposed to large volatility.
Aussie's love the water – it an emotional thing, which has an massive effect when buying anything..ask your g/friends & wives.Try this guy:
http://www.accouter.com.au Mark Whitaker he has good connections to accountants and is consulting in SA to firms.O
If anyone is still interested in Student accommodation – I have recently looked at one in Ipswich in QLD. The uni of QLD is next door and all the reseach I have done on the town seems to show that it is going forward attracting industry, infrastructure and investment.
PM me and I could send you some of the information I received – pp $290k, 3bdrm t/houses. rent about $400pw i think.
O
I like Bowen – good mix of possibilities and exposure to industry. Plus its coastal – inland cities don't seem to keep their alure, but all property owners love coastal towns. Bowen at less then 10,000 people (I think) and right on the GB Reef seems to have it all and ready to take off.
I had some townhouse info that I was looking at, that was due to start construction mid year….so pretty soon. I think the price was $380k for 3brm in the centre of town, which given the rents of 400-450 and not much on the market seems pretty good.
O
Also try student accomodation at Ipswich QLD -3brm T/h $292k, rent for around $400pw, new so good depreciation, building completed Nov/Dec 2010 so only deposit to pay until then.
PM me to get other details
Pesa,
Send me a private msg (click on my name, then private msg) – I will forward you an option that I am considering, it already has the backing of a bank and most legals taken care of.
It may suit, and you may be able to discuss with the people involved.
Olli
Have you thought about getting a loan in your Super Fund to buy it – I am looking at it now?
