All Topics / Help Needed! / How to use company business income to buy property in another company/Trust?

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  • Profile photo of AmirAmir
    Participant
    @amir1
    Join Date: 2020
    Post Count: 0

    Hi all,

    This might be a very basic question but would like to ask this question here with the hope of getting some great answers here.

    I am setting up a business (company A) and would like to use most of its income to buy property in company/Trust B. This is mainly to keep business and investment separate and have better asset protection and also have better tax outcome. So could you please help me to understand of my options for using company A income to buy property in company/trust B.

     

    Regards

    Amir

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

    I am not sure what you mean exactly but Company A could lend money to Company B which could buy the property. Company B could buy the property without a loan using Company A’s money – thereby creating a resulting trust. Company A could pay income out to its shareholders who could lend to Company B to buy property.

     

    There are lots of legal and taxation issues to consider.

     

    And this would not prevent Company A from being taxed on its income either – which seems to be a common misunderstanding.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

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

    Profile photo of AmirAmir
    Participant
    @amir1
    Join Date: 2020
    Post Count: 0

    Hi Terry,

    Thank you for your response.

    Reagrds

    Amir

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    Profits are just that, profits, and can be used for whatever you like.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
    Email Me | Phone Me

    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of GiannaapomGiannaapom
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    @giannaapom
    Join Date: 2021
    Post Count: 0

    If company A is going to invest in company B, it is better to make a C company. Offshore companies, which used to guarantee high security to foreign investors’ assets and offer tax benefits, have changed their policies drastically to avoid being under international sanctions. Nevertheless, offshore companies have managed to adapt to stricter international rules without reducing the volume of foreign investment and business attractiveness. Considering the peculiarity of the American states in terms of the differences in local laws, we can distinguish seven states with the most attractive conditions for starting a business. Florida factoring companies for business are currently developing projects in Florida, but there are bright sides for Nevada, Alaska, South Dakota, Wyoming, Washington, and Texas. A robust corporate law structure can also be noted in Delaware. These are the best places to do business.

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

    Nevertheless, offshore companies have managed to adapt to stricter international rules without reducing the volume of f

    You don’t know what you are talking about!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

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

    steve7876
    Participant
    @steve7876
    Join Date: 2022
    Post Count: 0

    Using a company’s business income to purchase property in another company can be a complex process. Here are some general steps you can follow:

    Determine the Purpose and Benefits of the Investment: Before you invest company funds in property, consider the purpose and potential benefits of the investment. Are you investing for long-term gains or short-term profits? What are the risks involved, and what are the potential returns?
    Identify the Right Company and Property: Identify the company in which you want to invest and the property that you want to purchase. Conduct thorough due diligence on the target company, including its financials, management, and operations.
    Formulate a Plan for the Investment: Develop a detailed investment plan that includes the amount of funds to be invested, the structure of the investment, and the expected returns.
    Obtain Legal and Tax Advice: Consult with legal and tax professionals to ensure that the investment structure is legally and tax compliant. Consider the tax implications of the investment, including potential capital gains taxes and property taxes.

    Buy Patents

    Profile photo of DogherDogher
    Participant
    @dogher
    Join Date: 2021
    Post Count: 0

    There are several ways to use the income from your business (company A) to buy property in another company or trust (company/trust B).

    Here are a few options to consider:

    Dividends: You can pay yourself dividends from company A and then use the after-tax income to purchase the property through company/trust B. However, keep in mind that dividends are subject to tax and may not be tax-efficient.

    Director’s Loan: As a director of company A, you can loan funds to company/trust B to purchase the property. The loan should be documented and should have a repayment plan with interest. Keep in mind that there may be tax implications if the loan is not repaid within a certain time frame.

    Equity Investment: Company A can make an equity investment in company/trust B, which can be used to purchase the property. This would involve issuing new shares or purchasing existing shares in company/trust B. This option can have tax benefits and may also offer better asset protection.

    Debt Financing: Company/trust B can borrow funds from a bank or financial institution to purchase the property. Company A can act as a guarantor for the loan, which can offer tax benefits and may also provide better asset protection.

    As you can see there are many options on how you can do that, the most important part is to actually gain money for all of that. If it’s not a secret, how do you make money? Thanks in advance for your answer.

    I am just considering right now trying all the sources, including trading on forex, to finally invest in properties.

    • This reply was modified 5 months ago by Profile photo of Dogher Dogher.
    • This reply was modified 5 months ago by Profile photo of Benny Benny. Reason: Improving layout for ease of reading
    Amor Scott
    Participant
    @amor-scott
    Join Date: 2023
    Post Count: 0

    Hi Amir,

    Congratulations on setting up your new business! Your plan to use the income from Company A to buy property in a separate entity (Company/Trust B) is a common strategy for asset protection and tax planning. Here are some options you may consider:

    Loan from Company A to Company/Trust B: Company A could lend money to Company/Trust B to purchase the property. This would require a formal loan agreement and repayment terms, and Company/Trust B would be responsible for paying back the loan with interest.
    Equity investment by Company A in Company/Trust B: Company A could purchase an ownership stake in Company/Trust B in exchange for the funds needed to purchase the property. This would make Company A a shareholder or member of Company/Trust B, entitling it to a share of the profits and potentially providing a tax advantage.
    Payment for services rendered: Company A could pay for services rendered by Company/Trust B, such as property management or consulting fees. In exchange, Company/Trust B could use the funds to purchase the property.
    It’s important to note that each of these options has different legal and tax implications, so it’s important to consult with a qualified accountant and/or attorney to determine the best option for your specific situation. They can help you navigate the complex tax and legal regulations surrounding business and property ownership, and ensure that your plan is structured in a way that is compliant and effective.

    Profile photo of PaulDominguezPaulDominguez
    Participant
    @pauldominguez
    Join Date: 2023
    Post Count: 0

    Thanks for sharing these options for funding property purchases! It’s crucial to consider the legal and tax implications of each choice. Creating a formal loan agreement between Company A and Company/Trust B can be a viable option, with clear repayment terms and interest. Alternatively, Company A can opt for an equity investment, becoming a shareholder or member of Company/Trust B and enjoying potential profits and tax advantages. To navigate the complexities, it’s wise to consult a qualified accountant or attorney who can provide personalized guidance. They can help structure your plan effectively.

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