I'm interested in the in's and out's of using a corporate entity to buy and sell real estate and some common benefits and problems of doing it this way… Any helpful advice?
Hi Fraggles
Steve has a product for sale called Wealth Guardian. I've found it to be an excellent resource for all my "structuring" questions. You can find it at:
https://www.propertyinvesting.com/resources/products/11Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I can think of a few disadvantages:
– Companies do not get access to the 50% CGT discount
– Asset protection (but shares could be held by a trust)Advantages
– May be able to sell the shares of the company rather than the property with the purchaser avoiding stamp duty
– Easy for several people to own one property by owning shares in the company
– Limited liability if the company is sued (eg. injured tenant)
– Keeps things clearly separate from personalTerryw | 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
Hi Terry,
"I can think of a few disadvantages:
– Companies do not get access to the 50% CGT discount
– Asset protection (but shares could be held by a trust)"Could you please explain the asset protection section as a disadvantage? Do you mean if the company goes bad then its assets are not protected?? (sorry to sound like Pauline!!
Cheers,
Adam.Hi all
In case you guys dont know already Wealth Guardian is sold out. I've sent them an email to see when it will be available again.
Also does anyone know what the rules are for a company trading with nil activity? If I was to register a company but not purchase ("trade") under that company for over a year will it have to be de-registered?
Ta
JoWith a company the shares have value, so if you hold the shares and you are sued personally, the shares at at risk. Creditors could get their hands on them and hence your property. A way around this is to hold the shares via a trust, or possibly better use a trust to own the property.
Another disadvantage of a company is that the information behind it is easily searchable by the public. You details such as place of birth, address, age etc are out there for all to see. This is not the case with a trust – they would only be able to find the trustee on the land titles database – but of course if the trustee is a company, they will be be able to search the directors and shareholder's details, but not the beneficiaries.
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 clarification Terry.
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