Advice Please

[Muddle]

A friend approached me regarding the setup of her IP portfolio. My ignorance in these matters and my fear of giving long time valued friends incorrect advice has prompted me to post here.

Their situation is as follows :

They live in a beach front house on a sub-dividable section, valued about 400k. They have a mortgage.

They own two IP's. One has been completly gutted and renovated. It will be on the market in 3 - 4 weeks. Valued about 300k total. They hold a mortgage on each house.

They own a 5000m2 flat section on top of a hill with good sea views. Valued at about 500k. Only a small amount of money is owing on this property.

The IP's and section where bought under a sole trader entity. Once the renovated IP is sold, they intend to reduce dept, buy another doer-uperer and flip it off. All IP's/section where bought in the last 6 years and they have built up considerable equity. I have spoken to them previously about forming a company, but they have never persued the matter. They do intend to sell all investments in the next couple of years.

I would appreciate some advice please from the more experienced formulites ( come in Fritz )

Barry

[martyparty]

Re: Advice Please

A friend approached me regarding the setup of her IP portfolio. My ignorance in these matters and my fear of giving long time valued friends incorrect advice has prompted me to post here.

I think the main risk for them here is their potential tax liability.

Tax advice should be obtained from a professional, given the size of their gains.

[Dean@Massiveaction]

Hi Muddle, they have some significant tax issues and free advice form any of us is only going to be so helpful. Exiting it wrong could cost them many thousands of dollars so if they care about their financial outcome tell them to go and see a property specialist accountant and get themselves sorted. A lot of the damage is undoable as they've already done everything wrong but at least they can minimise the damage. And yes it will cost them probably a couple of grand minimum to sort it out

[CJ]

They need professional help as it looks like they are buying with the intention to resale.

For the cost of a few hours of accountants time, it could save them a lot of money, if not on tax on penalties for getting it wrong.

[Muddle]

Thanks Guys. Appreciate the replies. Will pass on the info.

Barry