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  1. #1

    Default Where to begin? (lawyers, accountants, LTC, trust)

    I've been reading this forum for a while now and have started trying to find my first investment property.

    I know it's only a matter of time until I find a property to buy so I want to know what do I need to do now? I have already found financing up to $600k and I have a pretty well defined long term strategy. So, do I start with a lawyer and set up a trust or LTC? Should I start with an accountant to get advice on how to structure things for the best tax benefit? Should I start my own holding company and move cash into it so while I'm paying inspectors and valuers and while I find a lawyer and accountant, I can start claiming deductions? Or should I just buy a property and figure it out later?

    Any advice would be much appreciated. I suspect this is the hurdle that gets most people... I mean it's easy to look at properties and get reports and finance, but actually closing a deal is another thing.

    For context (and if you have recommendations for lawyers and accountants): I'm earning $100k, wife $50k and we are looking at properties in South Auckland.

  2. #2
    Join Date
    May 2004
    Location
    Bay Of Plenty, NZ
    Posts
    3,604

    Default

    So, do I start with a lawyer and set up a trust or LTC? Should I start with an accountant to get advice on how to structure things for the best tax benefit? Should I start my own holding company and move cash into it so while I'm paying inspectors and valuers and while I find a lawyer and accountant, I can start claiming deductions? Or should I just buy a property and figure it out later?
    Doesn't matter where you start, just start. Lawyer or accountant in either order. One doesn't take priority over the other, you need to work with both at the same time. One pertinent question to ask either - do you have your own rental properties? Remembering, you're interviewing these professionals to work for you, not the other way around.

    You may find that your first visit to either may be free...... after that they charge like wounded bulls!!

    Don't spend time or make offers until the above questions have been answered to your satisfaction.
    Patience is a virtue.

  3. #3
    Join Date
    Mar 2007
    Location
    Auckland
    Posts
    3,000

    Default

    You could, of course, just own the rental property in your own name.

  4. #4
    Join Date
    Jun 2004
    Posts
    10,313

    Default

    Quote Originally Posted by m2double View Post
    Should I start with an accountant to get advice on how to structure things for the best tax benefit? Should I start my own holding company and move cash into it so while I'm paying inspectors and valuers and while I find a lawyer and accountant, I can start claiming deductions?
    Given that you don't have any property you don't have a 'business' so claiming deductions may be difficult. Most costs are startup costs, some are just lost (can't claim) and many have to be capitalised to the property when you finally buy one. Find an accountant and work with them. You will need a lawyer in the end.

  5. #5

    Default

    Thanks for the advice. I've started looking for an accountant. Any recommendations? Preferably someone who knows how to use LTC's to maximise NZ tax benefits and knows enough about trusts and limited liability companies to keep my NZ assets safe from overseas governments.

  6. #6
    Join Date
    Mar 2008
    Location
    Auckland Wide
    Posts
    1,244

    Default

    I reckon find the property first, the advise from an accountant or lawyer will become more relevant based on rent income and loan amount. You are still able to change the ownership details of a property after you have entered into a contract and before settlement, with a deed of nomination. So Step one could be find a property, ideally after you have spoken to a lawyer about conditions you should use and then once the purchase is unconditional you could setup any ownership structures required.
    Hamish Patel | ph: 09 625 4693 | mob: 021 625 693
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  7. #7

    Default

    Thanks Hamish, I've found a property. Now I need a lawyer. Recommendations?

  8. #8
    Join Date
    Jul 2011
    Location
    Tauranga
    Posts
    2,769

    Default

    You could try this property talk member for Law: https://www.propertytalk.com/forum/me...-Ivan-McIntosh

    This one for accounting: https://www.propertytalk.com/forum/member.php?7859-Rosco

    Both provide excellent advice freely on these forums.

  9. #9
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,586

    Default

    Quote Originally Posted by mortgage broker View Post
    I reckon find the property first, the advise from an accountant or lawyer will become more relevant based on rent income and loan amount. You are still able to change the ownership details of a property after you have entered into a contract and before settlement, with a deed of nomination. So Step one could be find a property, ideally after you have spoken to a lawyer about conditions you should use and then once the purchase is unconditional you could setup any ownership structures required.
    An idea of the property is a great first step. Otherwise the right structure can change.

    First advisor is often. Mortgag broker, as you need to know what you can buy.

    Then once you have an idea of what you are going to buy, and that you have finance to buy it, see a property acountant.

    Please don't have purchased a poperty before you see us. Often investors buy absolute crap rentals and its too late if they have already purchased it!

    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.

  10. #10
    Join Date
    Apr 2010
    Location
    Auckland
    Posts
    307

    Default

    Quote Originally Posted by m2double View Post
    I've been reading this forum for a while now and have started trying to find my first investment property.

    I know it's only a matter of time until I find a property to buy so I want to know what do I need to do now? I have already found financing up to $600k and I have a pretty well defined long term strategy. So, do I start with a lawyer and set up a trust or LTC? Should I start with an accountant to get advice on how to structure things for the best tax benefit? Should I start my own holding company and move cash into it so while I'm paying inspectors and valuers and while I find a lawyer and accountant, I can start claiming deductions? Or should I just buy a property and figure it out later?

    Any advice would be much appreciated. I suspect this is the hurdle that gets most people... I mean it's easy to look at properties and get reports and finance, but actually closing a deal is another thing.

    For context (and if you have recommendations for lawyers and accountants): I'm earning $100k, wife $50k and we are looking at properties in South Auckland.
    The type of structure you should have depends on your personal situation, type of property, expected profit/loss etc. While you have provided some background a lawyer/accountant would need more information before advising you.

    Here is a summary of your options:
    1) Sole trader - You own the property in your own name. Profit/loss goes straight into your tax return.
    2) Partnership - You and your wife own the property. You file a partnership return that flows to your personal returns.3) LTC - The LTC owns the property. You file a LTC return that flows to your personal returns.
    4) Company - The company owns the property. You file a company return. Profit/loss stays in the company. Is paid out using dividends.
    4) Trust - Trust owns the property. Trust return needs to be filed. Losses stay in the trust, profits can stay in the trust or be allocated to beneficiaries. Trust can also have asset protections qualities and some flexibility however they do have higher costs because of trust administration costs.


    Generally I recommend that it is best to go with the simplest structure possible that achieve the required goals.
    NZ Tax fixed fee accounting, we are an online accounting practice. Our integration with Xero and our unique approach provides provides superior value to our clients.


 

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