All Topics / The Treasure Chest / What’s your structure to buy property

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  • Profile photo of PropertyGuruPropertyGuru
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    I was just wondering what sort of structure you guys use to buy (or planning to buy) Investment properties ( trust, company, company+trust … ). If you can explain also a bit about your structure saying why this is good for you that will help other people a lot.

    Thanks

    Amit

    Profile photo of puissancepuissance
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    what’s your situation first?
    do u earn > $80,000
    do u have a family
    are you a professional
    are you at risk of litigation

    Profile photo of PropertyGuruPropertyGuru
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    div43,
    no family
    yes professionl ( I guess ) [:)]

    I was interested in knowing about other people structure. I think not much people interested in telling [:P]

    Amit

    Profile photo of puissancepuissance
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    Personal
    Corporation
    Trusts – discretionary
    – hybrid
    – unit
    Superannuation Fund
    Offshore Trust and Offshore corporations (Canary Isl, Bahamas, Liecheistant, Nevada, Monaco, Austria)

    Profile photo of SachSach
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    Amit, have you got any other True Assests to use
    as “collateral” things like collectables, coins,
    antiques, toys etc.
    you may be can go into the more advanced IP’s as
    you want using these as your basis

    Profile photo of PropertyGuruPropertyGuru
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    Thanks Div,Sach,

    I think I didn’t put my question clear enough. I was asking how other people doing there structure. I know it’s depends on individual but still good to know how other people protecting assets and minimisning their tax etc with their structures.

    Amit

    Profile photo of SachSach
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    oh ok, wording can sometimes be very confusing.
    best of luck for it all.

    Profile photo of muppetmuppet
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    Hi Amit
    On this side of the Tasman Sea, I set up a family trust which owns the properties and within the trust we operate what is commonly called a LAQC. A LAQC is a Loss Attributing Qualifying Company. This allows us to claim immediate tax losses from our residential properties and put it against my normal income.

    The process seems to work pretty because I’ve been very pleased with the results over vthe last two years.

    regards

    Profile photo of westanwestan
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    Hi amit

    i own our own home in our name, so when we sell we are exempt of CGT. However i’m thinking about renting it our so i will probably sell it to the family trust.
    All of my Properties are owned in a Family trust. I am the trustee and the properties are still in my name but purchased in my capacity as trustee.
    The reason for the trust include the ability to distribute the profits to the lowest incomes in the family. Assett protection is also an advantage. the other advantage is that if i die we don’t have to worry about transfering assetts as the trust continues on for 9oyrs or whatever it is.
    regards westan

    Profile photo of KristineKristine
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    hi i am new at this game as well and was recently looking into this topic my accountant advised me against opening a company and trust fund as having a company doesnt protect you because you are the director you are still liable for it and it is quite expensive to start up and their are on going fees involved… what do others think about this subject??

    Profile photo of westanwestan
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    Kristine

    i agree with the accountant about the company structure because
    1. costs to set up and administer
    2. Could be a higher tax bracket always 30% tax.
    3. no provision to get the 50% Capital Gains free of tax.
    westan

    Profile photo of ADAD
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    Just clarifying something.

    A company in itself owning property will not get CGT discount but a trust with a corporate trustee in it’s distribution could allocate the gain to the lowest tax beneficiary. Thus a trust can (via distribution)allocate the gain and allow the 50% discount to be passed on.

    As tot he tax bracket this again applies if it is purely owned by the company. If the trust were in place as well that will change things.

    Costs are a factor but I am structuring myself for 5-10 years down the track when the appropriate structure will really start to make a difference for me.

    I am not an accountant and I would strongly suggest buying Steve’s Wealth Guardian for the information it has and how it explains the ownership options for property. Check it out at…
    https://www.propertyinvesting.com/resources

    Enjoy
    AD [:0)]
    (Andrew)

    “Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”

    Profile photo of MiniMogulMiniMogul
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    I am not using structures yet because it would lose me money, for various reasons – what westan said, plus the cost of setting up and maintaining structures would be more than i would ‘save’ in tax.

    Also, doing something solely for the purpose of ‘saving’ tax is illegal, i heard. (asset protection is another thing however)

    I like muppet’s idea and when I do something it will probably be something like that.

    cheers-
    Mini

    http://www.vocalbureau.com

    Profile photo of RodCRodC
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    AD’s right,

    Kristine,

    The protection side of the trust with a corporate trustee isn’t about protecting you from your liability if something goes wrong with the trust’s investments. You’re quite correct that if you are director you can be held responsible.

    The protection is that if you are held liable for actions outside the trust (eg: you are sued personally) then you don’t lose the assets that are in the trust – because they’re not yours.
    Whether you need this type of protection depends very much on your own circumstances.

    Westan,

    Will you have to pay stamp duty if you sell your home to the trust?

    Rod.

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    Hybrid Trust with corporate trustee
    Primary beneficiary being 2 different discretionary trusts and unit holders being superannuation fund, individuals, corporate beneficiary and the 2 different discretionary trusts.

    Profile photo of CeliviaCelivia
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    We’re in the process of buying our first IP in our own name. It’s not clear to me why it is not a good idea to buy properties in your own name. I kind of like to keep things as uncomplicated as possible[:D].
    What do others think about this, is this just being too ‘simple’?
    Regards, CVZ

    Profile photo of puissancepuissance
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    buying things in your own name could be parlous

    u should be concerned about litigation and tax consequences

    look at the structure that suits u

    unfortunately in this complex society we live in, buying assets in your own name is parlous

    Profile photo of stefankstefank
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    Does that mean just having the property in a trust does not cover in asset protection?. Is the company structure needed for asset protection?

    cheers,
    stefan

    Profile photo of puissancepuissance
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    for tax purposes, you should not purchase appreciating assets under a corporate structure

    Profile photo of westanwestan
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    Hi all again

    RodC
    yes i will have to pay stamp duty, if i decide to place my home in the family trust.

    Stefank
    you still have assett protection in a family trust even if it is not a corporate trustee.

    Mensch
    Boy i’d hate to see your accountants bill each year. why the need tohave multiple trusts as benificaries? Is it nessassary.
    westan

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