I have read a tonne of info on this site hoping for clarity but I'm as confused as ever.
Here goes my question with some background first.
I own a profitable business (pty ltd). My wife & I live in a house worth $450K that we owe $240K on. House is in wifes name.
I pay myself & my wife a small wage as we don't blow our $$$ on too many doodads & the less we earn = less tax to pay.
I wish to purchase an IP & it will be negatively geared for 1 to 2 years.
My accountant says I should buy in my name & then the next property through a trust & then the next in trust #2 & so on.What do you say & why?
Thank you,
SolomonWhy is your accountant recomending a trust for the second investment property and not the first?
If you are self employed, I would be inclined to use a discretioanry trust straight away. Look at having your company shares owned by a trust too – for asset protection and tax reasons.
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
I think the accountant recommended to purchase in personal name because of the negative gearing. You can't distribute losses from the trust. But I don't know why do you need trust no2?
A way around the loss problem is to use a Hybrid Discretionary Trust, but you must be careful and seek the advice of an expert accountant.
But if you are self employed, this should not be a problem as profits from the company can be diverted into the trust offsetting the loss.
Having different trusts is good for asset protection, but having one property per trust may be a bit of an overkill – depending on how valuable the properties are.
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
I am with Terry purchasing it in your name makes no sense.
If you are concerned about the ATO ruling over HDT why not consider a simple Unit Trust structure.
Richard Taylor | Australia's leading private lender
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