Rise High Investor Weekly Video #38 How to choose the right ownership structure



Why Does Ownership Structure Matter?

Your ownership structure determines how your property is taxed, protected, and passed on to loved ones. It’s a foundational decision for any investor, so it’s worth careful consideration upfront to avoid costly changes later.

Exploring Ownership Options

If you’re considering owning the property individually, you’ll need to decide between tenants in common or joint tenants. Joint tenants mean ownership automatically transfers to the surviving owner if one passes away. With tenants in common, each owner can allocate their share in their will.

For more flexibility or protection, you might explore owning the property in a trust or a company. Trusts, such as family or discretionary trusts, can offer tax benefits and asset protection. Companies can also provide some advantages, but these options may have higher setup and ongoing costs. Choosing the right structure depends on your circumstances and goals.

Key Considerations

When deciding on an ownership structure, keep these factors in mind:

  • Tax Planning: Consider how income tax, capital gains tax, and land tax will affect your property. Plan for both short-term and long-term tax implications to ensure the structure aligns with your goals.
  • Asset Protection: If your profession comes with legal risks, like being self-employed, the right structure can shield your property from claims.
  • Succession Planning: Think about how your property will be passed on to loved ones. The structure you choose can simplify or complicate this process.
  • Costs: While trusts and companies may involve higher costs initially, the long-term benefits in tax savings and protection often outweigh these expenses.

It’s best to decide on your ownership structure before buying the property. If that’s not possible, include “and/or nominee” on the contract to allow flexibility until settlement. Fixing mistakes later can be expensive, so seek advice early.The right structure is key to building a strong and secure property portfolio.