Accountant for Forming a Company or trust to buy a Property

I have messed up the thread title and opening post with my ignorance
Please forget that i mentioned companies and trusts

From what i see till now, Tenants in common is the best way to go
Am I correct ?

Is there any drawback to this route ?
Do the banks have any apprehension in lending ?
It will be 99% for me and 1% for wife

I am not worried about estate planning at this stage and my only goal is to maximize tax savings for the next 5 years through negative gearing

Cheers

 

Who knows, but I would say possibly not.

 

But do you realise that if you do not acquire more IPs and you bought well then your investment becomes neutral or even positively geared - well that is at least my goal, all my IPs I buy I plan after 5 years the most to be neutral or positively geared.
I think what you miss is the point for Property Investing. I do not invest for Negative Gearing, I invest for CG never to sell, to acquire more assets and grow my asset base. The negative gearing may become necessary for a premium property purchase in the first few years BUT the main aim is to make a profit, a CG and CF increases via rental increases over time.
As long as you understand that than it is ok.
My pilot friend did what you did, as he earned more, but then after 17 years, his wife started to earn more.... So what is your investment strategy, can you circumstances between your and your wife's income change, do you plan to keep this IP forever, will it be IP or PPOR?
I invest differently when I purchase my PPOR, when IPs, and even more differently when purchasing via SMSF!
So, please decide what you wish to achieve from this property first? It is easier than to guide and advise.....

 

I don't accept PMs.
You would have to email me. I try to make it difficult for people to find me as I have too many clients as it is.

 

A common statement I hear from people - who later end up selling!

Tax Tip 152: CGT won’t apply to me as I will never sell: 6 Reasons why it might https://www.propertychat.com.au/community/threads/tax-tip-152-cgt-wont-apply-to-me-as-i-will-never-sell-6-reasons-why-it-might.18004/

 

Why don’t you buy it in your name, rent it out and, when you move in, either leave in your name or transfer x% (say 50%) to the wife for ‘due love and devotion’. In Qld, Stamp Duty wasn’t payable; I haven’t done in Victoria but it looks like the same applies.

Hot Topic: Does your relative pay stamp duty if you transfer a property to them? | State Revenue Office

This would save you $’s setting up a company or a trust and you get all the negative gearing benefits while the property is a rental.

 

Can I have your email id please ?

Cheers

 

Capital gains will be taxable.

 

This can be done in VIC, but what are the consequences of transferring for no consideration? Sometimes it would be better to do it at market value and pay the duty.

 

I don't want to give out my email on a public forum. You will have to dig - my two company names are in my avatar. Btw I charge $660 for a consult.

 

FYI setting up a company and / or a trust is usually done by a lawyer. Trustee company is usually a shelf company from one of the usual suspects, but trust deed more critical (beneficiaries? Appointor? Settlor?).

In terms of accountants there are tax accountants (often have a law degree too), auditors, valuers (my background), financial accountants, etc.

So it’s important to understand the specific type of advisor you require for a particular task.

For example you wouldn’t ask a mechanical engineer about plumbing, you would go to a hydraulic engineer. Likewise you wouldn’t ask a sparky about tiling or plaster.

 

Unfortunately I think the setting up of a company is more commonly done by an 'accountant'. Same for trusts. But, in my opinion, this is the area of law and should be done by a lawyer. How can a non-lawyer give legal advice on the corporations act, company constitutions, trust law, equity, bankruptcy, family law etc when they are not trained or licenced. All a non-lawyer can do is to act as a scribe and insert names in places, and if they are a tax agent, give advice about commonwealth tax law - not state law such as stamp duty and land tax.

 

These days they are brand new companies because of the speed and ease of setting one up. In the past people used to set up companies and keep them on the 'shelf' ready to change the shareholders and directors over to the client.

 

I did this with no consequence but it was in Qld and it was years ago. I have no idea if there are any consequences if I did it today.

Back then, we consulted with our accountants and our lawyers. The OP would be wise to follow a similar path.

 

This is probably the most worrying part. Dont get too excited about the place and think youll live in it forever. Simple (and likely) things such as schools and age might make you move in the future. Cgt then becomes an issue. Renting out for 5 years then living in isnt very good in terms of cgt.

 

There are many consequences some which may never eventuate, but which should be considered such as
- asset protection on bankruptcy
- deductibility of interest if ever rented out again,
- asset protection on death, especially if blended family.

I think it is rarely a good idea to transfer real property without consideration. If you want to make a gift it could be better to sell and market value and gift the cash back.

Legal advice is needed.

 

So what is the best option in your opinion, in my circumstances
Just keep in mind that i am in the 47% tax bracket and there is a substantial negative gearing in the property

Cheers

 

if you are going to live in it then possibly a good way to own would be either
- single name = you or spouse
- joint names
= Joint Tenants, or
= Tenants in common in equal shares, or
= tenants in common in unequal shares

But there are still many ways to structure things including structuring the funding, structuring the deposit

 

Could there also be family loan arrangements with interest costs (income) being moved between spouses?

Not sure on the legality/deductions available with this.

Needs specific tax/legal advice.