Hi All
I’m a newby to this site but have been enjoying reading all the great advice for sometime.I’m going to NZ next month to buy our (myself & hubby’s) first IP.
My understanding is that it is recommended to buy IPs under a Trust structure. Therefore I rang a solicitor to ask about it. His advice was that it is a bad idea to use a Trust structure in NSW for IPs as the land tax is alot higher under Trusts than buying as individuals. Does anyone know if this is the case?
Also, he said that using Trust structures are more for tax purposes and therefore I need to speak to an accountant. I thought Trust structures were more to safeguard your assets??
Another query I have for those of you who are already investing in NZ is re LAQCs. Firstly, what exactly are they and secondly, are they necessary if you already have a Trust structure setup here.
I would appreciate advice anyone has.
Thanks in advance for your help.
Shar
Hi Shar
Have heard that LAQCs are not suitable for Australians investing in NZ.
They are only for NZers buying within NZ.
Why I don’t know.
I have a trust plus a LAQC, but then I am a NZer.
Regards
In NSW you will have to pay land tax on all property held in a trust (and other states?) – ie you don’t have any tax free threshold. So you will be paying extra tax there, but may be saving tax elsewhere. I think the benefits outweigh the negatives.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Shar
Everyones circumstances are different and you would need to discuss this with an accountant, with your long term plans too.
My own accountant, asked me why i wanted a trust? I asked about asset protection and other things. He said protect from who? Protect from what?
He said not to bother, for ME, the cost of setting up, and operating and then deciding on it and what I did with it….well for ME forget it.
However there can be advantages, depending on trust structure and who is involved. Eg unit trusts, hybrid trusts, discretionary….
Maybe most use a company and trust structure on here, but I dont. I know others who also dont…so check it out and ask your account as much as you can, pros cons, why etc? and COSTS.
maybe mine just didnt want the complications, but he did mention some tax aspects, but anyway thats enough!
Elves” a blind man may see what a sighted man may not”
Shar, get a second opinion! From a property investing savvy accountant.
Yes it’s not worth getting a Trust in place if you’re buying one investment property….but don’t you intend to buy many more than one over time?
Get the structure right at the beginning & it will save you a motzah (plus time and stress) down the track.
Cheers,
Aceyducey
Thanks Guys
I will keep investigating. I definitely want to buy more than one property and so want to get things right to begin with.
Does anyone know a “property savvy” accountant in Sydney? (I’m in the North West of Sydney). I don’t think my accountant would be much help!!
Re the land tax threshold, I thought the new laws in NSW mean you pay land tax on all IPs now regardless of cost and regardless whether held individually or in a Trust? Or have I misunderstood it?
Shar
Hi Pete
I too am looking for an accountant in Sydney with this knowledge. I will put a new topic on the Forum to ask the question.
Good luck in NZ. You will find it abit of a culture shock moving from Sydney but just enjoy the slow pace and you will learn to love it!
Shar
Elves, if you’re planning to invest in lots of properties, trust may be the way to do it. If your accountant isn’t happy with that, maybe it’s time to find a new one.
But if it’s just to get 2-3 IP and that’s it, then it’s really not worth having a trust set up. It’s more for the massive IP accumulators so to speak.
Cheers,
KevThis is a popular topic, I thought I’d throw my 2 bob in too. The one problem you have talk to Aussie accountants, it they are not (ussually) familiar with NZ tax laws.
I have done a bit of investigation on this front and here is what tI have come up with. You buy under a New Zealand trust. First of all, you now don’t have to pay capital gains tax to the ATO when you sell, (you otherwise would have to, even though the property is in NZ). Also, you can take advantage of NZs generous depriciation laws (I believe it is 5% regardles of when the building is built).
It depends how much you want to spend over there. If you are talking a decent amount of money, get an Aussie and Kiwi accountant talking to each other. This will cost you alot, but could save you more.
Dan.
Looking for positively geared property? Check out http://www.positivelygeared.com.au
That’s true Dan
The accountants we speak to in Au have all been very open about their lack of experience regarding NZ laws.
Cheers,
Aceyducey
Hi Shar
Iam a bit confused why you are discussing NSW if you are going over to NZ.
Anyway in regard to land tax in NSW the new should actually benefit trust structures. The reason is that the first $400k will be levied at .4% rather than the previous 1.7% a saving of about the 1.3% mark.
It is still to be seen whether the .4% will apply to each property up to the $400k value or whether it is accumulative as currently applies.
Cheers
Hi Ziz
The reason I mentioned NSW is that I live and work here and evidentally want to buy IPs here.
I originally thought I ought to have the right structure set up here, however, after reading all above, I realise I can probably forget about anything here and just look at whether I need to set up a trust structure in NZ whilst buying IPs there.
There is so much to learn in this business!
Shar
Offshore investing I really don’t know why you want to do it – nobody has told me yet how much positive are you looking for???
All this talk about NZ has made me get a transfer starting 1st May. Ive got 4 weeks in Auckland paid accomodation before I "slum it" a bit and take my time and educate myself before jumping into the PCF game. KPI magazine is a great start and they delivery to OZ! Its taken me almost 2 years since the first seminar in Melbourne, but here goes nuthin! Im lucky in that my new job allows me to travel the length and breadth of the North Island. Im curious on all this talk on the IRD cracking down on people who live in their own IP and claim depreciation, ect. I wonder what they think if you live in 1 room and rent the other 2 or 3, would it then be classed as a legitimate IP? Food for thought. For those Im leaving behind in Sydney who want to invest in NZ, would anyone have a Sydney Accountant with the knowledge of trans-tasman investing and tax implications. Please let me know. Many thanks.
Hi Shar, I was speaking with an ex-pat from NZ and he laughed at the way I failed to pronounce "Mangare". Its not as looks!
Im sure Ill stand out like a sore thumb with this Ozzy "ickcent" of mine. I will keep an eye on your new thread or I will add to it as I will keep looking.
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