Should I restructure post property crash?

Question from leah updated on 15th July 2011:

I'm a kiwi living and working in the UK (non-resident) and brought an investment property (my mortgage is in NZ title in my name) in 2007 with the view of setting up a LAQC or Trust with my Mother who owns her property (no mortgage, pensioner). However the property bubble has burst, the investment property has lost considerable value and I'm accumulating year on year losses I can not claim. What is the best restructuring i.e. both properties in my Mothers name or mine and can we use a Trust or a LAQC as a legal entity to reclaim losses?

Our expert Mark Withers responded:

It doesn't sound to me like there is too much wrong with the current structure of personal ownership. This still allows the losses to be deducted in your personal name where they can be carried forward to the future, it also simplifies the tax issues associated with your cross boarder tax planning.

An LAQC is not an option because it is about to be phased out, it's replacement, the look through company is only available to companies who are NZ tax residents with their management bases located in NZ, this doesn't sound like you.

A trust also has ongoing foriegn tax issues when the settlors are not resident in NZ and doesn't allow for losses to be distributed to beneficiaries. I suspect you are best off as you are.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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