• Login:
Welcome, Register Here
follow PropertyTalk on facebook follow PropertyTalk on twitter Newsletter follow PropertyTalk on LinkedIn follow PropertyTalk on facebook
Results 1 to 3 of 3
  1. #1

    Default Rental equity withdrawl - Tax implications?

    Hi,

    Got a quick question I was hoping someone can help with! I have a rental property which has appreciated in value, I want to draw out some equity and reinvest it elsewhere. Rental is being run as a company. If I draw out the equity and reinvest in bonds or stocks, still remaining within the company, are there any tax implications? Would I need to declare this to IRD anywhere?

    Cheers

  2. #2
    Join Date
    Jan 2006
    Location
    Wellington
    Posts
    559

    Default

    If the company owns the assets that you have purchased there has been no payment to anyone so no tax on this but if these new assets earn income that will become part of the income of the company along with any tax paid on this income which will be able to be imputed.
    If you have an ordinary company and take out equity as a dividend you have to pay tax on it. QCs you dont have to. If you wind up the company you dont have to. If you pay it out as wages to a person with a low tax rate they pay the tax on it.

    That is the general picture.
    Doug

  3. #3
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,592

    Default

    You are not really drawing out equity. All you are doing is using company funds to invest in shares, bonds, stocks or whatever, still through the company. So shouldn't be any tax implications at all. So if you have a revolving credit facility, and you draw down some to buy shares in company name, then won't be any problem, and interest will be claimable.

    Drawing out equity or funds, would be if you took money out of the company, and then invested personally. And yes there could be implications of this, or better ways to do this.

    I think you are making this seem more complicated than it is. Really everyday transaction. But if you are not clear or I have presumed something wrongly, let me know.
    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.


 

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. How to shift equity from the rental home to own home
    By mastre101 in forum Finance, legal and tax (NZ)
    Replies: 10
    Last Post: 18-02-2014, 11:03 AM
  2. Transfer equity from rental to personal property (not LTC etc)
    By Recalcitrant in forum Finance, legal and tax (NZ)
    Replies: 3
    Last Post: 12-01-2014, 11:07 AM
  3. Using equity in rental to buy a section for PPOR
    By Lanthanide in forum Finance, legal and tax (NZ)
    Replies: 4
    Last Post: 26-07-2013, 01:52 PM
  4. Equity Release from rental to own home
    By betty bungalow in forum Property Investment (NZ)
    Replies: 7
    Last Post: 13-05-2013, 09:51 AM
  5. Any tax implications on subdividing & selling rental property??
    By Pegasus in forum Property Investment (NZ)
    Replies: 6
    Last Post: 21-07-2011, 08:36 AM
  6. Replies: 5
    Last Post: 15-03-2011, 08:21 AM
  7. GST implications
    By jace the ace in forum Finance, legal and tax (NZ)
    Replies: 15
    Last Post: 29-07-2009, 02:33 PM
  8. How do you use the equity in your rental house to buy another?
    By Reno in forum Property Investment (NZ)
    Replies: 23
    Last Post: 19-02-2007, 04:05 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •