All Topics / Help Needed! / maximum borrowing structure

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  • Profile photo of BennyhubBennyhub
    Participant
    @bennyhub
    Join Date: 2013
    Post Count: 5

    I currently have one client lined up to buy off me using vendors finance with many more planned but I don't want to limit my business due to borrowing capacity. 

    I have just set up a company to invest through but also have an investment in my name with $190,000 owing. There is no equity in my investment to borrow against just yet and was wondering what is the best way to continue to grow my property portfolio without the banks stopping me. I want many positive geared properties to compliment my income one day and am just trying to iron out all issues with this. Cheers

    Profile photo of Anthony KAnthony K
    Participant
    @anthony-k
    Join Date: 2010
    Post Count: 56

    Hi Bennyhub

    Do not ever – never put you properties into a company unless you are a developer and you buy land as trading stock for improvement and resale.

    You immediately lose the 50% CGT discount.

    You should use your company as a trustee for a Fixed Unit Trust and also retain the ability to legally move your property to a SMSF later.

    If you are going to make a collection you might use several trusts and share them with your partner to get extra land tax savings. Have fun

    Anthony K

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I agree with Anthony. And also add that using a company will not increase your borrowing capacity. In fact it could hinder it.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of BennyhubBennyhub
    Participant
    @bennyhub
    Join Date: 2013
    Post Count: 5

    Thanks guys. I want to make sure before I dive into anything. I'm putting an offer in for a property tomorrow that I'm selling straight away on vendors terms to my clients. Because I'm doing an instant re sale I wouldn't benefit from the CGT discount? I plan to do this with many houses and base my company around vendors terms sales. The reason using a company appeals to me is because I would only pay 30% tax on all earning in the company and that means more for re investing. I'm currently in the 2nd highest tax bracket so would get stung with high tax once I get into it. Please all advice is welcomed!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Benny,

    No flexibility. What if you used a discretionary trust with a company trustee. You could then distbute income to lower income beneficiaries and still have the benefit of distributing to a company if you wish. You get flexibility.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

Viewing 5 posts - 1 through 5 (of 5 total)

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