Investment Company?????

[safe10Member@safe10Join Date: 2003Post Count: 0]

July 7, 2003 - 1:16 pm

I have 4 investment properties in Vic & Qld returning approx $55K gross per annum with mimimal expense.

My montly repayments are $1,800 per month, total value of properties is approx $1 Million.

I would like to register a company and continue to purchase additional residential / commercial properties using existing equity.

Not sure if i should operate my investments as a company or should i continue negative gearing against my personel tax.

Any ideas / suggestions from other experienced property investers would be greatly appreciated.

[davidfemiaMember@davidfemiaJoin Date: 2003Post Count: 89]

July 7, 2003 - 1:20 pm

A discretionary trust will be a far better alternative.

Thsi will allow you to claim the same benefits as an indiviual with Capital Gains Tax. It will also allow you to minimise tax legally, and efficiently.

David Femia

Femia Property Group
Property Investment Consultants
http://www.femiapropertygroup.com.au

[ARWParticipant@arwJoin Date: 2003Post Count: 21]

July 8, 2003 - 3:37 am

I’ve just been through a similar process, which resulted in the following set up –

* Discretionary Unit Trust owning the properties * Loans taken out personally (with Trustee of Unit Trust as Guarantor – lending requirement)
* One of the Unit Holders is Family Trust

My understanding of how this works is that because losses can’t be distributed from a trust (can only be offset against gains of the trust) – when negetive gearing this system allows the trust to distribute the income to you, which you can then offset against the interest on the loan.
Then, when you sell the properties and/or they become +ve, the income can then be distributed through the Family Trust to the lowest income earner.

Mmmmm, hope that makes sense!!!!!

We briefly discussed the issue of a company but in our circumstances there wasn’t any real need for a company and it didn’t provide the same benefits for us – although I presume it would provide more asset protection.

I’m no expert, but hope that helps – although everyone was careful to tell me that it totally depends on your personal situation as to what is the best structure, so sourcing a good accountant is the best way to go.

Cheers!!!

[wilandelMember@wilandelJoin Date: 2003Post Count: 761]

July 10, 2003 - 10:29 am

Hi,

It is not advisable to buy appreciating assets in a company structure. You will lose the CGT discount. A discretionary trust is the way that I have gone also.

Sounds like you would benefit from reading Steve McKnight’s “Wealth Guardian”, which is all about different structures for asset protection etc.

Good luck,
Del

[IshitaMember@ishitaJoin Date: 2003Post Count: 20]

July 10, 2003 - 2:46 pm

I agree with Del, have a look at WealthGuardian and also, I’ve posted a summary on Trusts on this forum, so that may be a short summary worth looking at for you. The seminar certainly did not mention companies as alternative methods for wealth creation and asset protection with regards to property.

Bye

Ish[]