Hello all,
I’m thinking about creating a company to use to purchase property. If I buy and sell in less than a year then I only have to pay a flat tax rate of 30 percent. This will allow me to have more flexibility and split up my liability for extra security.
However, how do you get a loan for a brand new company with no assets. If I move one of my positively geared properties to the company I will need to pay stamp duty again. If I act as garantor for the company my bank will not take my borrowing capacity into account, only the companys. Do I have to buy a letted property outright using the company just to give the company an income so it can get loans for the future? Or, is there a way I can have the banks take my borrowg capacity into account so I can purchase a property using the company? Is there any literature on this matter that you know of
You should have little trouble getting a lender to use your company with you as guarantor – using your borrowing capacity.
I suggest you find a broker experienced in this area.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks for your reply MortgageHunter, I will speak to more brokers.
Will brokers consider myself as director and the company as two seperate entities in regards to giving discounts on interest rates for borrowing over 500 000 dollars? ie. Do they consider me as two customers or as one?
I am not too sure.
I can find out tomorrow but I strongly suspect you will be two different entities.
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi James
If you are borrowing in a company name that does not have Two years trading figures, then the directors of the company will be required to show that they can service the loan,
You will still be eligible for a discount rate,Regards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:1800 820 500
VICTORIAPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
James,
I suggest you extensively research Trusts before forming a company for buying property.
A company is not generally regarded as the best vehicle for property investing – even if your focus is on less than 12 months turnaround on property.
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
Agree with Aceyducey,
And if you want to talk to a Trust savvy Accountant, I suggest you contact Dale G.
http://www.gatherumgoss.comRegards
Steven
Mortgage Broker[email protected]
http://www.mobilemortgagemarket.com.au
Ph:1800 820 500
VICTORIAPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Thanks for your replies
I will look further into trusts – I didn’t think they provided the same security in limited liability, but I will investigate further.
That may be true but you have to weigh up the pros and cons of the estate and tax planning benefits trusts offer. In my opinion, the trust (with corporate trustee) wins. Good luck.
Cheers
Stu
James,
Trusts provide more security than companies
Look beyond ‘limited liability’.
And consider using a corporate trustee in any event.
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
Hi Boyz, Dale G reccomends using two trusts, one for holding the investment properties and one for running the business from…WHAT THE !!!
Can anyone explain why ?WF
WallFlower,
Because the trust running the business is relatively high risk, so you want to keep it separate from your passive investments.
If the business goes belly up owing $1m, you don’t want the liquidators selling off your other investments to pay the creditors.
GP
Sooo Piggy,
Seperate Tust, Seperate Corporate Trustee?? Another $2000to cough up and were off and running?Originally posted by WallFlower:Seperate Tust, Seperate Corporate Trustee??
I don’t know that you’d need a separate trustee company, but something to ask about.
Another $2000 to cough up and were off and running?I think you have to compare it to what you potentially could lose otherwise if the business failed. Consider it an insurance premium.
GP
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