PROPERTY & YOU – BY PAUL MCKENZIE, ABS CONVEYANCING
Recently had enquiries to me, asking “what gives better tax benefits, buying a direct property investment? Or a buying a property investment through a trust?
A good tax accountant, is the best professional adviser, to answer this for a client. It all depends on your own your tax arrangements, financial situation, with income, assets, financial goals & risk tolerance.
Considering the two options –
Direct property investment (in own personal or company name) offers simplicity and potential for negative gearing benefits. Suits first time investors, as it has lower set up & maintenance costs, generally less expensive, than a trust. Disadvantages, offers less protection from creditors and lawsuits. Limited ability to distribute rental income to different family members in lower tax brackets. Risk of paying more tax on rental income, if on a high income than you would with a trust.
Property investments through a trust, offers tax flexibility and asset protection, but with higher costs and complexity. Suits better for the more experienced, mature investor. A property trust has estate planning benefits (ease and more tax effective way to transfer assets to beneficiaries), but disadvantages, not able to negative gear and potential higher taxes, if the income is not distributed (trust itself could be taxed a higher rate).
Anyone looking to buy a property investment, especially for the first time, must speak to their tax accountant first, for the right advice, on the right property investment structure option.
www.absconveyancing.net.au | 1300-037–057 | [email protected]
