Kurtuk wrote:

Hi guys,

Where does the line get drawn about whether I go to an accountant or a lawyer?

Cheers

You need advice on tax law. But a registered tax agent can advise on tax law just as a tax lawyer can. A tax agent (often an accountant) would be cheaper generally!

Thanks for the plug PHP, but I am not actually an accountant. I am a director of a registered tax agent company and also a lawyer (and director of a separate incorporated legal practice). Accounting is a separate profession and not all accountants are tax agents and not all tax agents are accountants. Only a tax agent can submitt a tax return for another person and only solcitors or tax agents can give tax advice (maybe financial planners can give tax advice in limited circumstances)

thanks for the feedback. I tried to make it easy to understand. Wait till you read my trust book and asset protection book, I am making these complicated.

Trusts do give land tax advantages, asset protection but not generally borrowing power advantages (indirectly they can).

Asset protection – what are you trying to protect from? If it is creditors then insurance won’t help you for court judgments from breaches of contract, defamation etc. But insurance will help if a tenant is injured on a property you own – in most cases, not all. Not the same at all.

Not sure what you mean about posoitive gearing as this wouldn’t change anything.

hilander

Banks lend money al the time to people with no property, 1 investment property or more. no issues with this.

if ‘your partner buys the property and has you on title’ then you would be buying the property! It may be possible for you to get a building loan, and/or your partner to.

This is no right or wrong way, but just different ways. Whether you should both go on title would depend on a whole range of things you don’t seem to be considering – see my newsletters for some articles on these topics.

Yes, capital gains tax and stamp duty.

However, if it is a transfer related to a breakdown of a marriage/defacto it can be exempt from both. Your friend will inherit any CG with the property so this will be extra tax in the future and should be taken into account.

First get the finance sorted, then seek legal advice.

Freedpm have you got a link? Crazy stuff

That may not be a good idea!

Costs
tax advice
legal advice
conveyancing
discharge mortgage
new loan
CGT and
stamp duty

Dave

Thanks for the comments about the newsletter, I was planning to cover trusts and companies in future editions.

A company is a separate legal person and has its own tax return done each year and pays tax. Any directors would need to give personal guarantees and this counts, from a servicing point of view, as if you took the loan in your own name. So a commpnay would effect you servicing just as buying in your own name would. A company pays a flat 30% tax so if your personal taxable income is such that you would pay more than 30% tax on any income from the company (wages, dividends etc) then you may leave the money in the company and cap the tax at 30%. You can then get it out at a later date when your income is lower.

A trust is not a separate legal person and is not an entity, but a relationship between the trustee and the beneficiaries. A company would buy property in its capacity as trustee. A trust will have its own tax return but generally does not retain any income and won’t be taxed. All income will flow out to the beneficiaries – which might be you and you might pay more tax. Or it may be distributed to a comapny and capped at 30%.

generally a company is not recommended to hold appreciated assets as the CGT will be 30% whereas if you had a trust or your own name it could be a max of 45% x 50% + medicare.

But there are many things to consider when structuring, a major one being land tax.

See my book for some information on trusts. link is in my 3rd newsletter (free download).

Have a look at my first few newsletters, I have covered ownership and other structures.

It depends on his situation. A SMSF could work out cheaper than the fees he is paying, and he gains total control. There are also various other tax benefits available to SMSFs – anti detriment payments. Other benefits are estate planning, control and various tax strategies.

Yes, to be entitled to the full exemption.

One you have established it as the main residence by moving in, you can then be abscent.
The relevant sections are s118-145 ITAA97 and s118-192 and surrounding.

In this person’s case the first period was rented out, so the property will always partially be subject to CGT.