Hey all,
I have currently saved enough money for a deposit for my first investment property. However, i am unsure how to go about sheltering my income once i generate income from my assets. I have been reading many posts on this website and done some of my own research into it. I have found that there are two popular ways on doing this. First, there are companies, where i put my investments under the company so i can pay any expenses and then pay tax. Secondly, there are trusts that i am not that familiar with.
Can anyone explain these subjects clearer to me with any helpful references that i should seek regarding this matter?
Your input would be greatly appreciated
Thanx again
“Everyone wants to go to heaven but nobody wants to die”Hi,
I am putting the finishing touches to a product that will answer your questions in this area.
I expect that it will be ready in March.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hey there steve,
Sounds great!!
Wot is the name of this new product?
Is there going to be a preview of it anywhere on the site at all?In the meantime, is there any references out there currently that u would suggest i have a look at? Even just the basics?
Thanx again and i will be waiting for the arrival of the new product launch!!
“Do wot your hart thinks as u will be criticised either way”Hey there steve,
Sounds great!!
Wot is the name of this new product?
Is there going to be a preview of it anywhere on the site at all?In the meantime, is there any references out there currently that u would suggest i have a look at? Even just the basics?
Thanx again and i will be waiting for the arrival of the new product launch!!
“Do wot your hart thinks as u will be criticised either way”Ok so i may be a newbie to posting on this site, but is the purchase of a product the way to answer this original question?
I am sure i read somewhere that the purpose of this site is to promote discussion of positive cashflow producing property investments…or something like that
So come on, could someone with a little knowledge on this share what they know and not refer us newbies to having to purchase products to answer our questions.
Hey Harryson and Scott,
This is a tricky one because it could be different for everyone in their situation. It really is worth checking with a professional so you get the best and most suitable set up for you.
I personally use a Family trust with a corporate trustee (company) and have myself and family as beneficiaries. I am the sole director of the company (my wife owns our house) and this gives me some level of protection fromlosing our house.
As to cashflow this year I will probably have to think about setting up another company as beneficiary so I only have to pay 30% tax (not marginal rates (higher). Realise though that this suits me at the moment. It may not suit your needs.
Please see a professional to get real and appropriate advice.
Hope this helps.
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David BrinkBriefly,
If you use a company then the company pays tax at the company tax rate (30%). The company can then pay dividends to the shareholders who then pay tax on the dividend at their marginal rate. The shareholders receive a tax credit for the tax already paid by the company. Companies can choose not to pay a dividend and instead retain the earnings for future investment.
Trusts don’t pay tax but instead must distribute all earnings to the beneficiaries of the trust. In a discretionary trust the trustee can determine how much is distributed to each beneficiary.
Eg: if you have 2 beneficiarys, one of which is in the top tax bracket and the other not working you would distribute to the not working person as they are in a lower tax bracket. Distribution percentages can be varied each year so if the following year both are in the same tax bracket then you would do a 50/50 distribution.The most common structure is to have a discretionary trust with a company as the trustee. In this case the company is for asset protection only and does not pay tax as all earnings belong to the trust not the company.
It’s best to talk to an accountant and solicitor about the best structure – I’m neither so don’t take my word for it.
Rod.
Hi Scott
I second (& third) the other comments here by AD & RC.
Do the reading first as it will save you money on fees.
Just remember that you need a team, and vital players on the team are your accountant and solicitor; both of whom need to contribute to a conversation on a structure that best suits your personal circumstances.
Good Investing
a big hairy fella named B [
]Hey all,
Thanx for the help!!
So what do i say when i go to a law firm or an accounting office? Is it best to describe my situation first? Is it best to set up trusts or companies first or wait until i am generating some positive casflow from my assets?
Thanx again, u all have been so helpful and kind!!
8>)
“Everyone wants to go to heaven but nobody wants to die”
It’s generally best to set up the structure first as there will be costs (CGT, stamp duty) associated with transferring them at a later date.
Different properties may require different structures. eg: a negatively geared property may be best owned by a high taxed individual whereas a neutral or positively geared one may be best to be held in a trust.
Rod.
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