Look Through Companies LTC's and LAQC's

[Juicy Guava]

I am wondering about the experiences of other people who were in an LAQC and who have transitioned to a LTC. How has the transition gone, has there been an impact on your tax return(refund) and if so, how great has that impact been.

The background to my questions are that we are still LAQC and have 1 month left to elect to transition over and i'm not sure if we want to do that or stay as QC and then gift the shares in the company to a trust... Our loss each year is currently sitting around roughly $2-$5k depending on mainly interest rates and our R&M bills...

Any advice and experiences other people have had around the transition would be greatly appreciated.

[drelly]

How much building depreciation did you build up in the laqc?

[Juicy Guava]

$22,000 so far.

[drelly]

So it will cost you about $7k in recovered depreciation to shift an LTC to a trust. This isn't applicable if shifting a QC. That's why I stuck with QC... it was going to cost me $40k if I went to LTC.

[Juicy Guava]

I haven't opted for LTC yet, so are you saying that if I default to QC then I won't pay depreciation recovered when gifting shares in the company to a trust?

Having said that, i'm keen to hear from people who have gone to LTC and what their experiences have been... Are they finding the structure okay, are they happy with the tax situation, do they perceive any negatives that they didn't realise about in the beginning, now they're in LTC?

[drelly]

I haven't opted for LTC yet, so are you saying that if I default to QC then I won't pay depreciation recovered when gifting shares in the company to a trust?

That's my understanding, yes. From what I see, there's a huge number of landlords that have gone to LTC but don't realise this.

[jedimaster]

That's my understanding, yes. From what I see, there's a huge number of landlords that have gone to LTC but don't realise this.

note that there are numerous and relatively wide exemptions to the LTC depreciation recovery rule

[Eugene]

I really regret going to an LTC. One reason is that having a company structure is now no longer an option, I could revoke LTC status, but if I did that I could not revert to a QC but to an ordinary company. With a QC you can get capital profits out of the company without having them taxed, ie when you sell a property, but with an ordinary company such capital profits are taxed if you take them out of the company. So to get them out of an ordinary company you have to wind up the company.
There is no such problem with capital profits under the LTC. But if you do like a company rather than an LTC be aware that once you become an LTC you can never be a QC again.

[drelly]

note that there are numerous and relatively wide exemptions to the LTC depreciation recovery rule

Can you explain?