Stick to your struc­ture

NT News - Real Estate - - Market Place - AN­THONY KEANE

STRUC­TURE is vi­tal in real es­tate in­vest­ment – and not just to hold up the roof.

How an in­vestor struc­tures their prop­erty own­er­ship can re­sult in hun­dreds of thou­sands of dol­lars of losses or gains over the life of an in­vest­ment.

Metropole Wealth Ad­vi­sory di­rec­tor Ken Raiss said prop­erty in­vestors should start with the end in mind. “It’s us­ing the leg­is­la­tion to your best ad­van­tage,” he said.

Mr Raiss said fre­quent mis­takes were often re­peated with struc­tures, such as cou­ples al­ways putting both names on con­tracts.

“They think they can share the tax ben­e­fits but it means each per­son is re­spon­si­ble for 100 per cent of the loan but they’re only get­ting the ben­e­fit of half the prop­erty. It re­duces the over­all bor­row­ing ca­pac­ity of that fam­ily unit.

“Be­ing in mul­ti­ple names can cost you a lot more in re­la­tion to your land tax.”

Mr Raiss said some in­vestors failed to struc­ture and link debt with their prop­erty cor­rectly, and un­less the link was clear the ATO might dis­al­low de­duc­tions.

He said hold­ing too many prop­er­ties in one en­tity could be costly.

Au­thor, in­vestor and univer­sity lec­turer Peter Kouli­zos said in­vestors should al­ways seek pro­fes­sional ad­vice about struc­tur­ing.

He said a high-in­come earner would ben­e­fit from big­ger tax de­duc­tions while a prop­erty was neg­a­tively geared, but would prob­a­bly end up pay­ing more cap­i­tal gains tax when it was sold.

Some­times a trust struc­ture is a good op­tion, some­times it may be self-man­aged su­per­an­nu­a­tion.

Bob Fioretti, 60, a semire­tired for­mer chef, has ac­cu­mu­lated 12 re­gional prop­er­ties in 12 years and used a com­bi­na­tion of joint own­er­ship, in­di­vid­ual own­er­ship and trusts.

“Land tax is a big is­sue – it’s a hold­ing cost,” Mr Fioretti said of the is­sue.

How you struc­ture your prop­erty own­er­ship can be the dif­fer­ence be­tween los­ing or gain­ing thou­sands

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