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  • Profile photo of Bradles CBradles C
    Participant
    @bradles-c
    Join Date: 2004
    Post Count: 52

    Hi Guys,

    I am starting a property investing partnership with my friend.

    I have developed a joint venture agreement just in case things go ‘pear shaped’.

    Apparently a non-trading company or ‘trust’ is the best way to go when entering a partnership ?

    What type of trust should I set up, how do I do this and what are the benefits ? Also, what fees are involved ?

    Any advice would be much appreciated !

    Cheers [biggrin]

    Brad

    Profile photo of Mark UnwinMark Unwin
    Member
    @markunwin
    Join Date: 2005
    Post Count: 32

    Hi Brad,

    A company may not be the best option for you. Whilst this is simple for a joint venture and income tax is capped at 30%, you will not benefit from the 50% exemption on any capital gains you make.

    A trust could also pose a problem if your trust incurrs losses (family trust election rules meaning future income can only be distributed to one family group).

    Options to consider would be a partnership of trusts (you would both need to setup your own family trusts) or a unit trust.

    cheers,

    Mark Unwin
    Williams Partners Pty Ltd
    http://www.wp.com.au

    Profile photo of TyTy
    Member
    @ty
    Join Date: 2005
    Post Count: 18

    hI gUYS.

    I AM VERY INTERESTED IN WHAT YOU GUYS ARE TALKING ABOUT AS I AM ABOUT TO START INVESTING WITH MY BROTHER, TROUBLE IS I DIDN’T UNDERSTAND ANYTHING THAT YOU HAVE MENTIONED HERE IF YOU COULD EXPLAIN IT A BIT FOR ME IT WOULD BE GREATLY APPRECIATED. WE HAVE ONLY DECIDED TO GO PARTNERS OVER A FEW BEERS AT XMAS SO I HAVEN’T LOOKED INTO IT THAT MUCH AT THE MOMENT. ALSO I REALISE THAT WE WILL NEED A CONTRACT FOR THE PARTNERSHIP, OTHER THAN A BREAKOUT CLAUSE (ie IF WE GET DRUNK AND BEAT THE PISS OUT OF EACH OTHER AND NEVER TALK AGAIN WHAT HAPPENS WITH THE PROPERTIES) WHAT OTHER STUFF WOULD WE NEED IN THE CONTRACT? AND DOES IT NEED TO GET CERTIFIED BY A SOMEONE?

    ANY FEED BACK IS GREATLY APPRECIATED

    Ty

    (SORRY ABOUT THE CAPS, DIDN’T REALISE IT WAS ON)[blush2]

    Profile photo of Mark UnwinMark Unwin
    Member
    @markunwin
    Join Date: 2005
    Post Count: 32

    Hi Ty,

    Brotherly love, you are bringing tears to my eyes!

    A structure you could use with your brother is a family trust. As you are related, you are both eligible to receive profit distributions without any tax issues arising (i.e. family trust elections as I mentioned before).

    You should document your agreement as to how you are investing and your % share.
    You could prepare one informally or if you are concerned, a lawyer could draw one up fairly cheaply.
    The contract doesn’t need to be certified, just signed by you both.

    Cheers,

    Mark Unwin
    Williams Partners Pty Ltd
    http://www.wp.com.au

    Profile photo of PropertyGuruPropertyGuru
    Participant
    @propertyguru
    Join Date: 2003
    Post Count: 1,502

    I suggest to get Hybrid trust with or without company as trustee .

    Cheers
    PropertyGuRu [sultan]
    Mortgage Consultant
    [email protected]
    MSN ID: amitash, Yahoo Id: bornguru

    NZ loan pre approval from OZ in 48 hours

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