In Episode 20 of the Property Investing Journey, Mike catches up with Tim Garth and Dan Osborne, to shed some light on entity structuring and how to best go about determining the optimal structure for your property purchase. Both Directors of CATS Accounting, Tim and Dan spend their spare time hosting their Podcast, Two Drunk Accountants, where they share their knowledge and dispel the myths on the challenges of running a small business.
In Tim and Dan’s view, all too often, clients turn up at their Accountant’s office at the end of the financial year and declare that they’ve purchased a new property. Typically, little thought has been given to how the purchase of that property should be structured, based on the client’s individual circumstances. They propose that their clients are much better served when advice is sought early in the process, so that the appropriate planning and structures can be put in place to optimise their clients’ tax position and mitigate their risk.
In this episode, Tim and Dan bring their down-to-earth commentary to a complex topic and set into layman’s terms how to choose the best structure for your property purchase. Mike drives the conversation through a multitude of common queries, covering off tax minimisation, negative gearing, risk mitigation, self-managed Super funds and more.
If you’ve ever wondered about the benefits of establishing a Trust, or the tax benefits of a self-managed Super funds, then this podcast will get you started with a high level view of this important topic. With Mike’s trademark humour and Tim and Dan’s practical advice, you won’t want to miss this episode.
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Mike catches up with Tim Garth and Dan Osborne, to shed some light on entity structuring and how to best go about determining the optimal structure for your property purchase. In this episode, Tim and Dan bring their down-to-earth commentary to a complex topic and set into layman’s terms how to choose the best structure for your property purchase. Mike drives the conversation through a multitude of common queries, covering off tax minimisation, negative gearing, risk mitigation, self-managed Super funds.
What we cover in this episode
- Examples of different ways of structuring property purchases
- Partnership as Tenants in Common as opposed to a commercial entity partnership
- The advantages and disadvantages of buying as an individual
- The two main considerations of entity structuring
- The pros and cons of negatively geared properties
- The tax benefits of purchasing via a self-managed super fund
- How to best protect your assets
- The most common mistake when setting up a Trust
“Each individual purchase is different and your circumstances when you buy one are different to when you buy the next one. It’s the same as starting a business and structuring. Each time you do it there’s a different set of considerations that need to be thought of“ Dan 2:22
“As we’ve seen as well, the Government is always changing their rules, and it’s not just the Federal Government, it’s the State Governments as well, where you might be buying your property. So there’s a lot to consider and it’s a moving space“ Tim 2:55
“Negative gearing, everyone loves it, everyone says “great, I’m going to reduce my taxable income, pay some less tax’. I always say, make sure you’re not actually just losing money on that property“ Dan 6:52
“As a Trust, you actually can’t distribute a loss so there’s no such thing as negative gearing, it’s carried forward losses“ Dan 8:06
“I think a lot of people know about self-managed super funds, they know that it saves you tax, perhaps they don’t know the exact reasons why though“ Tim 12:30
“With any entity structure, it’s always a matter of considering your costs and benefits“ Tim 18:15
“(A Trust) is not a cure all, it’s not a magic bullet, but it definitely does help. It builds in layers of protection. It means that you have options and you have a defense“ Tim 22:55
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