Advice please

Discussion in 'Introductions' started by Gypsy78, 15th Jun, 2017.

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  1. Gypsy78

    Gypsy78 Member

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    Hi all
    Have read the forum for a number of years and am now serious about making this my new reality! I would like some advice on how to structure my investments- ie: trust, company etc?
    A little about me:
    sole investor
    Own home with @500k equity
    With $100k mortgage
    I would like to buy multiple rental properties over the next few years and also flip one house a year(becoming new ppor)
    Many thanks in advance for any advice :)
     
  2. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Hi @Gypsy78
    Welcome to PC.
    What are your reasons for considering trusts / company? Depending on your circumstances, would be worthwhile considering that trusts and companies tend to have land tax from 1 dollar, and you don't get capital gains tax discount in a company. Your accountant will be able to advise further on this.
    Where are you intending to flip properties? Are you going to build and flip or will you renovate and flip?
     
  3. Gypsy78

    Gypsy78 Member

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    Hi
    Thanks for your response! I've had some advice that discretionary trusts are the most beneficial structure and have also had advice to set up a new company for each property to minimise one tax from current investors, so I'm confused!! I'm looking to renovate and flip ppor each year in nsw but also want to build up a rental portfolio
     
  4. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Is this advice from a tax accountant? I can't see how setting up a new company for each property will help. Tax losses will be trapped in the company and you wont get the benefit of negative gearing. Having multiple entities will add to your tax compliance costs as well.

    With building up a real estate portfolio and flipping at the same time, it would be useful to look at your overall borrowing, and see how it fits in together. Having a low PPOR debt will definitely help.
     
  5. Gypsy78

    Gypsy78 Member

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    Hi
    No the new company each property was from an investor currently structured that way.
    What's the best way to look at my overall borrowing? Ideally I'd like to purchase an investment property early in the new financial year and sell my ppor at the end of the year and repeat each year, I just want to get my structure in place from the beginning so I have a solid foundation:)
     
  6. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Talk to a broker. Without full information no one can advise on next suitable steps for you.

    Agreed on getting your structuring right and building strong foundations.
     
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  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Dubious advice - wasn't from a lawyer was it?

    Depends on the state, but in NSW a trust gets no land tax theshold at all, but a company does. If you set up a new company the land could be aggregated between the 2 companies as if they were one.

    If you are talking about living in the property and claiming the main residence CGT exemption then this won't apply to a company owned by a trust or a company.

    It could apply to a property held in your own name, but if you are doing this with the money making motive it may be seen as a business with no exemption from CGT and no 50% CGT discount either.

    best to get proper legal advice on structure before jumping in.
     
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  8. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Also bear in mind that borrowing in trusts can be difficult - it can severely limit your borrowing capacity as you can't negative gear most trusts. You need to speak to a broker for sure, and also get a good accountant.

    Don't just copy another investors structure - it may be right for them but completely wrong for you. It's not a one size fits all thing. Many people over complicate things.
     
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  9. Ross Forrester

    Ross Forrester Well-Known Member

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    I think the discussion on your asset structuring will need to be a lot more developed before you can answer what entities are best for you.

    You will need a good discussion on income tax planning, capital gains tax, asset protection, estate planning, state taxes, succession, your personal goals and the cost of startup and ongoing advice.

    My general "vibe" at this stage for you is that you should try for as much simplicity as possible. Different people have a different approach and others will undoubtedly express them to you - that is the benefit of this forum.

    Welcome.
     
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  10. Gypsy78

    Gypsy78 Member

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    Thank you for all the advice, I guess the next question is here so I start?! Whom should I see first? An accountant or a broker? Any recommendations in south coast NSW? Thanks again
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Only a lawyer can advise on all aspects of structuring. an accountant can only advise on the commonwealth tax aspects.

    Brokers can only advise on loans.
     
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  12. bob shovel

    bob shovel Well-Known Member

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    i dont even bother thinking about trusts and that mumbo jumbo. have a basic understanding then let the accountant work it out! :)
     
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  13. Gypsy78

    Gypsy78 Member

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    Thanks terry. Is there anyone that does all?!!
     
  14. larrylarry

    larrylarry Well-Known Member

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    Speak to Terry.