One of the most frequent mistakes I see with property investors is selecting the wrong financial structure to hold their assets in. It is such an important decision but one that many property investors, especially first time property investors don’t pay enough attention too.

While there are many variations on financial structures there are 3 main types that people use:

1. Trusts

2. Companies

3. Superannuation

While not an “entity “as such, investing in your own name is one that also needs to be considered. 

The importance of selecting the right entity has wide ranging implications. These include:

  • Estate planning: The capacity to pass assets to your children seamlessly when you die. Certain structures allow this estate planning better than others. 
  • Tax minimisation: “Don’t give them a tip because they aren’t spending it wisely” as the late great Kerry Packer said to the Australian government when questioned about tax. The ability of some structures to reduce tax more effectively than others needs to be taken into account. This is not only in relation to income tax, but also capital gains tax and GST. If the wrong structure is used for the purpose you intend, this can cost thousands, even millions in wasted tax. 
  • Asset protection: For those in high-risk professions or those investors looking to protect assets from spouses of sons and daughters would do well to investigate structures that provide that added asset protection that they are needing. 

If one of these more complex structures is not suitable and you decide to invest in your own name, it is important that the percentage split between spouses is done correctly as this will have an impact on income tax and capital gains tax down the track. 

If you need any help with this, please get in touch with the office and I would be happy to help.