People are consistently turning to real estate investment for its capital growth, tax benefits and future retirement income.
As accountants and advisors, we can help in determining the optimum structure for the purchase of your investment property by assessing your current and future income.
Selecting the correct structure is vital. Options include:
- As an individual
- As a partnership - jointly or tenants in common
- In a company
- In a trust (unit trust, discretionary trust)
- In a Self-Managed Superannuation Fund
Before settling on the type of structure, consideration should be given to the following:
- Asset protection
- Income tax planning
- Retirement planning
- Succession planning
- Other taxes (GST, land tax, stamp duty)
Income generated from your investment property is taxable. However, you are entitled to claim as deductions against your property income, the following:
- Real estate agent management fees
- Land tax
- Capital works
- Other expenses incurred to generate income
Borrowing to acquire an investment property is a popular and common form of financial leveraging. Often the cost of borrowing exceeds the income received from the property; but it is only a timing issue - incurring losses now in favour of perceived capital gains on sale. The tax treatment of losses incurred can be used to offset other taxable income.
It is wonderful to sell your investment property for a handsome profit however, this may also attract a potential tax liability form capital gains tax.
Tax planning is essential when considering the acquisition and disposal of any investment. It will allow you to explore all strategies or options available to minimise potential capital gains tax.
Whilst we want to look at ways of minimising tax, this should not be your only focus when considering the acquisition and disposal of various investments. Equally important is planning and understanding the investment to ensure you have sufficient and consistent cash flow to sustain the property, personal finance and other pursuits.
We are here to help you, email us to discuss your needs.
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The information provided in this information sheet does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.