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financial structure LTC vs Trust vs Company

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  • financial structure LTC vs Trust vs Company

    hi there,

    We are in the process of setting up our financial structure to start investing in rental properties. We've had discussions with several Accountants, all of them advising another strategy: one advised a trust, one a LTC and another one a Company.
    This got my quite confused....
    We are in the process of setting up a trust to protect our family home, to protect this. There is no bank involved for our family home.
    We would get a 'revolving credit' type loan to get money from bank A to use as deposits to buy property by getting mortgages from Bank B, C, D, E. Eventually we would like to build up to having about 4 rental properties.

    I would be very interested what your opinion would be of the financial structure to get, especially with the changes around ring fencing losses that will come into play from about April 2019.

    Thanks for helping!!! Really appreciate advice

  • #2
    With ring fencing the best structure changes. There is some advantages to having it under one structure, say a trust or personal names and then later on changing the structure. It would be hard to get quality advice without an understanding of your plans now and in the future in some detail. There are certain things which are not best discussed on a public forum as well.
    Hamish Patel | ph: 09 625 4693 | mob: 021 625 693
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    • #3
      Hi Suzanne,

      There isn't a perfect structure for everyone, as everyone is a little different.

      Have you paid for a property advisory meeting with a property accountant? Someone like GRA or us, who really specialise in property?
      - if you have, then a key part of advising on a structure, is explaining the reasons so that you understand it. So I would go back to the property expert and ask them to clarify why! I would ask over and over again, until you know why, as I feel this is very important.
      - if you haven't, and you have done with a business accountant, or franchise , or just had a free chat , then I think you need to meet with a real property accountant, and pay for the expert advice.


      Also, the structure can depend on what kind of property you buy. So having a good idea of what kind of rental, can really help with identifying the best structure.

      Ross
      Book a free chat here
      Ross Barnett - Property Accountant

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      • #4
        Unsure how you could protect your freehold home under a trust if you are using it as security against it. Sort of negates it , doesnt it.
        cross securitisation, mortgage discharge very important too as something goes wrong , you home is at risk.

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        • #5
          contact rosco to get his expert advice

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          • #6
            Originally posted by BlueSky View Post
            Unsure how you could protect your freehold home under a trust if you are using it as security against it. Sort of negates it , doesnt it.
            cross securitisation, mortgage discharge very important too as something goes wrong , you home is at risk.
            exactly and the reason why I now am thinking about dissolving the family trust as I'm not enjoying to pay my lawyers $450-$600 when it comes to re-fixing my trust loan for another 1yr fixed term and if shifting banks even more... just one utter waste of money in hindsight
            Last edited by JBM; 15-07-2019, 08:56 PM.

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            • #7
              Umm I think you need to get a decent mortgage broker and you won't have to pay the lawyers fees.

              cheers,

              Donna
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              • #8
                A company is the most efficient. Tax arrangements are easier too. The new trustee act will make the management a little more complicated with duties to beneficiaries. A lot of times a trust is an upsell by your lawyer.

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                • #9
                  Originally posted by nick000 View Post
                  A company is the most efficient. Tax arrangements are easier too. The new trustee act will make the management a little more complicated with duties to beneficiaries. A lot of times a trust is an upsell by your lawyer.
                  A company has this major issue! https://www.cswaikato.co.nz/index.ph...n-auckland/153

                  Ross
                  Book a free chat here
                  Ross Barnett - Property Accountant

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