I am lookint purchasing a block of units with a friend, turn them into strata title and then sell off a portion of them and keep the rest as a long term investment returning positive cashflow.
I have been advised to set up a family trust or a discressionary trust as we can save tax dollars but I dont see how, we are both single, so cant siphon money out through siblings or spouses, I am thinking of just setting up a company and buying through the company as I cant see the benefit of a trust.
The company would pay 30% tax, (I am over this threashold from my income, my friend is a couple of grand short) and has the asset protection as well as the ability to lease "company cars" so we can get the benefit of that also.
We both plan on scaling back our paid jobs in the next 6 – 12 months with a view to invest full time with 3 years.
Companies don't really provide much asset protection. The shares will be owned by yourselves and if you are sued then these will be at risk of falling into the hands of creditors. A trust can help in this sort of situation
The company only provides limited protection if it is sued. eg. someone is inured on the property and they sue the owner of the unit.
Trusts also provide flexibility. You can still distribute to a company if required and cap the tax at 30%, but you also have hte flexibility to distribute elsewhere when needed – say you get married in a few years, or stop work for a year etc.
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
Also remember that companies don't get the 50% CGT reduction if you keep a property for longer than 12 months.
Cheers,
Thanks for your help.
Anybody know a property savvy accountant in Newcastle?
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