Property

Direct property investment is a popular choice for an investment portfolio, but there are pitfalls alongside the opportunities you'll need to negotiate. The two common most popular forms of direct property investments you may be considering are:

• Residential houses and units.
• Commercial premises, like factory units and offices.

But there is much more to consider. Will the property be bought by individuals or partners? If partners, will they have jointly held equal shares or unequal shares as tenants in common? Would the property be better held by unit or discretionary trust or a hybrid of both? Should it form part of a self-managed superannuation fund (SMSF) investment portfolio?

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WHAT DO YOU NEED TO CONSIDER WHEN INVESTING IN PROPERTY?

What ownership structure should you use to purchase the property?

Ownership structure determines whether:

• the property is bought by individuals or partners (with jointly held equal shares, or unequal shares as tenants in common), or
• the property is held by a unit or discretionary trust, or even
• the property is held by a self-managed superannuation fund.

Determining the best ownership structure is not always clear cut. You need to consider capital gains tax (CGT), the benefits of negative gearing, land tax issues and ownership timescales in the light of your circumstances and goals. We can advise on the most appropriate structure for you.

Does the special Division 43 construction write-off apply?

The Division 43 construction 2.5% building write-off may result in a deduction of $10,000 each year on a free-standing house, but depends on the date the house or unit was built. We can introduce you to our preferred qualified quantity surveyor for the depreciation reports needed to maximise your tax deductions.

We can also outline the pros and cons between investing in units and freestanding houses, and we can refer you to our specialist broker for the finance that best suits you.

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