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selling a property in a laqc

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  • selling a property in a laqc

    I have a property that has been in a laqc since june 2004, unfortunately due to combination of happenings, we are going to have to sell it. We have been told that laqc's are supposed to be long term, what can we expect from inland revenue, etc, are there any penalties? Thanks for your help

  • #2
    My understanding is that sale of property from an LAQC is not liable for tax as long as your intention was to hold for the long term. If you do sell, document your reasons and give your lawyer and accountant copies. However, it's not always as clear cut as that and no advice on here can take into account your individual circumstances. Have a chat with your accountant before taking any action.
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    • #3
      IRD will want back any depreciation claimed by you over those years.

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      • #4
        Hello north shore,

        There is no difference between an LAQC selling the house or a private individual. The same rules apply, same considerations, same responsibilities. There may be different, aditional paperwork involved because companies require additional paperwork, but that is seperate from tax issues on sale, which is what you seem to be interested in.

        I am curious at your comment that 'LAQC's are supposed to be long term". What does this mean?

        xris

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        • #5
          Just that we were told the laqc was for the long term or we would face penalties, that if it was short term that there were better structures to place the property in.

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          • #6
            Originally posted by north shore View Post
            Just that we were told the laqc was for the long term or we would face penalties, that if it was short term that there were better structures to place the property in.
            Can I ask who told you that?

            Company, eg LAQC, ownership does have some advantages, but it also has some drawbacks. Similarly so does ownership held in trust.

            What the advice is probably referring to is the depreciation claw back on sale, because transferring a tax loss to the shareholders in relation to their respective holding is one possible advantage of an LAQC.

            However, the same claw back rule applies to other ownersip forms. Any issues relating to an early sale and payment of a capital gains tax also apply to other ownership structures.

            You will find that in most cases for most people owning in your own name is fine. It is also a lot simpler and a lot cheaper than having to mess around with lawyers and accountants and all the extra paperwork.

            If however you are one of the minority that does have a more elaborate long term plan then the correct ownership structure is critical.

            xris

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            • #7
              north shore, how have you bought other investment properties then,.... under your own name, a LAQC, or other entities?

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              • #8
                We have two rentals, 1 is held in our name and the other was on the advice of our tax consultant placed into a laqc.

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                • #9
                  north shore, is there the abilty to sell the LAQC as opposed to the actual property in the LAQC?

                  I am certianly no expert but understand this cna have different implications to attempting to sell the property from a tax perspective.

                  It will depend whether you have other properties in the LAQC you wish to keep.

                  It may be worth asking the question of an expert on this

                  Simon

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                  • #10
                    I dont think anyone would buy an LAQC of you just to get access to a property. However, it is handy to be able to shift it to your own trust etc.

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                    • #11
                      Has anyone here ever bought or sold shares in a company whose assets were solely property (ie buying/selling houses in effect). This does not include selling internally - such as to your own trust.

                      xris

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                      • #12
                        Sold 10,000 shares in Kiwi Property Trust last year.

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