All Topics / Legal & Accounting / company or personal

Viewing 17 posts - 1 through 17 (of 17 total)
  • Profile photo of simonmaksimonmak
    Member
    @simonmak
    Join Date: 2004
    Post Count: 1

    hi all,just wondering if there was any benefit in buying these +cashflow properties in a company name rather in my personal name.i read in Steves book that they re-invest their profits into new investments.if in my name i would just add this +cahflow to my own income.can companys invest profits to avoud this situation.cheers

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    Hi Simon and welcome

    I wouldn’t buy anything that will appreciate in a company name as if you do sell, you will be subject to 30% tax – there is no CGT exemption for companies.

    A better option if you wanted to not have it in your own name (asset protection and tax minimisation) is to set up a discretionary trust (possibly/probably with a company as trustee). There have been many discussions on this topic previously.

    Cheers
    Mel

    Profile photo of Still in SchoolStill in School
    Member
    @still-in-school
    Join Date: 2003
    Post Count: 1,844

    Hi Simon

    Very Much agree with Melbear.

    quote:


    I wouldn’t buy anything that will appreciate in a company name as if you do sell, you will be subject to 30% tax – there is no CGT exemption for companies.


    cheers,
    s.i.s

    “People 4 get that by saving just $3 aday & investing it sensibly over a working life, you’ll end up wit around $1 million.”

    Profile photo of DoogieDoogie
    Member
    @doogie
    Join Date: 2003
    Post Count: 12

    Hi Melbear and Simon,
    I was just reading Steve’s reply to the question posted by “Damajoo” and he stated as follows:

    ” Hi Anita,

    Thanks for your post and welcome to the community!

    quote:1. In whose name did you buy the properties?

    In the name of the entity which we set up to contropl our property investments. I believe that owning assets in your own name is not the best idea as you can be sued and the lot is on the line. Instead Dave and I created a structure where we control our wealth without owning it in our own names.”


    When Steve refers to the ‘entity’ is he referring to a company name which he has set up to be the ‘owner’ of all of his investments..? If so, how is he position at sale time in regards to the 30% tax you have mentioned..? In anycase, I was under the impression that you had to live in a property as the owner for at least the first 12months of ownership to avoid CGT…..I hope I have not spoken out of turn here….!?[:I]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Hi

    I beleive Steve uses a company to buy as Trustee for a Discretionary Trust. The income goes to the trust, as the company’s sole role is trustee. The income from the trust can be then distributed to individuals or another company so that the max rate of tax paid is 30%.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of DoogieDoogie
    Member
    @doogie
    Join Date: 2003
    Post Count: 12

    Hi Terryw,
    wow, that all went over my head!….how I can find out about trustee’s and discretionary trust and the relationships you mentioned with a company name..?…is that something that information I can get from the company you work for (Discover Home Loans) or is it something from legal advice….?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Sorry Doggie, I am a mortgage broker not an accountant. If you want to lear about trusts, just do a search on the forum and buy the buy called “Trust Magic” by Dale Gatherum Goss. http://www.gatherumgoss.com.au

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of DoogieDoogie
    Member
    @doogie
    Join Date: 2003
    Post Count: 12

    Thanks Terryw, wilco….

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Yep, trusts are probably the way to go, although you won’t be able to get the 12 month CGT concession if you do so.

    If you just buy property using a company, it’s also going to be difficult getting your capital out – there’s a bit of red tape you’ve got to go through.

    At the end of the day, you need to work out what actually works best for your particular situation.

    Cheers
    Elysium-M

    Profile photo of DoogieDoogie
    Member
    @doogie
    Join Date: 2003
    Post Count: 12

    Hi All,
    thanks for you help……was just wondering, Steve are you able to explain your comment that I placed in the string above that you had directed to “Anita” inlight of the replies I have recieved from terryw and Elysium-M?

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429
    Originally posted by Elysium-M:

    Yep, trusts are probably the way to go, although you won’t be able to get the 12 month CGT concession if you do so.

    Hi all

    It’s my understanding that the CGT exemption still exists as trusts are a ‘flow through’ entity, so everything passes down to the invidivuals. This way you can still choose who’s best to get the income/CG.

    Cheers
    Mel

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    Mel, that is my understanding and experience too. (I tried to post earlier but couldn’t due to that flodd control thingy)

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Goes to show how little I know!

    Cheers
    Elysium-M

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429
    Originally posted by Elysium-M:

    Goes to show how little I know!

    Cheers
    Elysium-M

    But I think it shows more how useful a forum like this can be – to make us question what we think we know, and therefore open our minds.

    I’ve certainly had to change a lot of the things that I thought I knew![:D]

    Cheers
    Mel

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Absolutely, Melbear!

    I’d to think that you can learn a new thing everyday!

    Cheers
    Elysium-M

    Profile photo of DoogieDoogie
    Member
    @doogie
    Join Date: 2003
    Post Count: 12

    melbear, terryw, elsium-m, thanks again. your help has been fantastic, i hope i can return the favour one day!….I think I will get my hands on a book like “Trust Magic” as you suggested terryw…..
    thanks, and have a great weekend…[;)][:D]

    Profile photo of Kiwi-FullaKiwi-Fulla
    Member
    @kiwi-fulla
    Join Date: 2002
    Post Count: 371

    Hi all,

    Another interesting thing about the CGT discussion is that if you Wrap a property…… you are not liable to pay CGT as you cannot be taxed twice on all the income you have recieved.
    Check it out with your tax/accountant specialist….
    I may have read the interpretaion wrong :o)

Viewing 17 posts - 1 through 17 (of 17 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.