What property ownership structure would you recommend?

Question from Sharon updated on 18th November 2010:

We are looking into purchasing a lifestyle property with multiple dwellings. Our family intends to live in one dwelling and rent the other as well as lease out some of the land. With my husband also being on the higher tax bracket an LAQC would allow us to minimise tax deductions and property expenses. What property ownership structure would you recommend?

Our expert Mark Withers responded:

My advice would be to plan for the predominate purpose. If the predominate purpose is as a residence for yourselves an LAQC is not appropriate as it should not own your home. This leaves a trust or personal ownership. Before deciding you need to budget your tax outcome by aportioning the costs and interest based on the proportion of rented area to private area. If this indicates a loss a simple partnership will allow this to be claimed 50/50. If the property is in trust no loss can be distributed to beneficiaries. If there is a rental profit the trust is probably best because it offers asset protection and the ability to distribute the net rental income as you see fit. 

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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