There is no “One Size Fits All” approach to buying a property. A smart investor will consider their own individual situation and seek advice in order to formulate a strategy that will work best for them.
From the beginning, one of the most important things to consider is which entity to buy your property under?
- Your Super Fund
– Income received from a property owned by your superfund will be taxed at only 15%
– If you sell your property whilst in pension mode Superannuation, you will not pay any Capital Gains Tax under the current tax legislation
- A Trust
– Any loss incurred by a Trust is held within that entity; you cannot distribute a loss out of a trust.
– It is recommended only to buy your property in the name of a trust if it is positively geared, unless you have other passive income coming in to offset a loss.
- A Company
– A company is not recommended as it is not eligible for the Capital Gains Tax exemption upon the sale of the property.
- You, Your Spouse, or Together
– Extremely dependent on individual circumstances.
- For instance – in terms of Negative Gearing, generally the property would be bought in the name of highest income earner… BUT
- Upon the sale of the property, Capital Gains Tax would be calculated according to the highest income earner’s marginal tax rate – ie. At a higher rate of tax.
Seek the advice of Northern Business Consuiltants to tailor a strategy that fits you.