Oyster risks capital gains tax

Many investors are put off property syndicates because they do not have a termination date at which they will receive their money back.

If they needed their investment before the syndicate was wound up, they have to sell on grey markets where they are matched up with those wanting to buy in to the scheme. But there are no guarantees that there will be a buyer available when a seller wants to sell.

But syndicates that specify a wind-up date can expose themselves to capital gains tax. Properties that are bought with the intention of sale are subject to capital gains tax.

Oyster’s latest syndicate will buy a distribution centre in Westney Rd, Mangere. The property will be sold after five years unless the investors vote against that.

The offer is forecast to provide cash returns equivalent to 8.1% a year. The property is leased to Cardinal Logistics. The rent increases by 1.4% a year and every third year to the greater of the market rent or 1.4%.

The total acquisition cost is $25,100,000. The purchase will be funded by 276 investor interests of $50,000 each and an ANZ loan of $12,500,000.