Hi all
My Partners and I am still considering WRAPPING as a valid win/win positive cash flow strategy and ,as we belive that we need to obtain a quantity of these to make it work ,aim to do about 40 within 1 year . The main issue we see is that as a holder of the titles each property be included in our Land Tax assesment and assuming $80 k per Purchase and assuming the unimproved value is 40k per purchase ) then we would be assesed on $1,600,000 which is $32,000 in land tax . If I try and pass this onto my WRAP Customers it is nearly $800 each , I don’t think that would work .
As the Pre Tax $50 pw profit per WRAP is the aim then 40 WRAPS equals $104,000 pa , with admin and if land tax is applicable it brings the value down to hard o justify .
I assume whomever has completed a high number of WRAPS would have encountered this problem .
Anyone have any commenst on this .Hi, I can’t comment on the wrap issue, but one way to minimize
land tax according to my legal advisor is to have a separate trust for each property, therefore, each is in a separate entity and not in your name taxed as a whole.
It costs apparently 500 to set up each trust but well worth it also in terms of liability issues.
I think land tax is another one of those hugely regressive taxes and perhaps we should be starting to lobby the politicians about this.
The cost of stamp duty is prohibitive enough.Hi Stephen
I’m sure Steve is the expert on this, but I’ll have a go at outlining the way I believe he sets up his property wrapping structure.
You set up a trust, with a company as trustee. Each trust buys a number of properties, up to the point where it’s “full” – I don’t know what prompts this, but I would imagine land tax is one factor.
Then you set up another trust, with another company as trustee, and start again.
Hope that helps.Keep smiling
Felicity
Hi,
One of the many things outlined in my Wrap Library is the treatment of Land Tax (in Vic.)
Basically, if you know what you are doing you can avoid having to pay it at all. The solution has nothing to do with asset structuring – just about knowing the SRO system and how to use it to your advantage.
Regards,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve
What is the SRO system.
Luch.R
Hi Luch
SRO = State Revenue OfficeKeep smiling
Felicity
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