Hi guys im probably sure this is a repeated forum topic but any info would be appreciated- im new to this sorry about my lack of knowledge.
What is the difference between a trust , partnership or company ( add any other facilities if i missed any out)
When and why are these avenues used ?
Is it a must if i'm buying my first IP and planning to grow my portfolio in the future?
Tax Pros and Cons
Whats the difference if i just by the IP in my name – am i saving or losing money ( tax etc)Please feel free to add any valuable info that is also related.
Thanks for your experienced replies in advanced.
A trust is where someone owns something on behalf of someone else. usually with property, you or a company you control will own the property for a large class of beneficiaries. Income can be distributed to any number of these beneficiaries and this can result in reduced tax. There are also asset protection advantages as the legal owner of the property doesn't really own it. The beneficiaries are the real owners.
A company is a separate entity which usually limits liabilities. It is like an artificial person. It can hold assets and do business. The advantage with companies is mainly the limited liabilitiy factor. ie it is is sued, the person behind it is usually safe.
Partnerships are when 2 or more individuals/trusts/companies or any combination aim to do some profit making venture. Sole trading partnerships should be avoided because of the risk factor – if one of the partners gets sued, the remaining one can be forced to pay up.
With property, there are only two worth considering I think. Individuals and trusts. Spouses can partner, but I think it is generally not a good idea to purchase a property in a company because of the tax rates.
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
thanks for the advice – its experienced forum contributors like you who really make this forum worth wild to read through – even though my questions are basic and maybe repeated thanks for dropping a line or two hopefully Terry helped answer anybody else's questions on the topic.
It looks like Terry has explained things well for you here but if you're after some more info please visit http://www.propertydivas.com.au/3TaxMang/TaxMan.aspx
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