It’s important to get the ownership structure right when purchasing an investment property as it can be costly to alter deeds later on.
Investment Properties can be held through a variety of titles:
- In your own name
Investing as sole purchaser means the property is registered in only one name. Expenses relating to the property can only be offset against your own income.
- Joint tenants
Ownership is split equally between 2 or more people with income and expenses divided the same way.
- Co-Ownership
Co-ownership means the ownership is divided into units ie 70/30, 60/40 etc., with the level of ownership being defined differently for each party. Co-ownership can be tricky so it’s vital that you create a co-ownership agreement.
- Through a Trust
A trust is a suitable structure for positively geared properties, as the trust can be useful for distributing income in a tax effective manner and offering asset protection.
- Through a Company
This is a good strategy if there is a large number of co-owners and the property will generate fully taxable profits. It is easy to sell shares if one owner wants to exit the arrangement.
- Through A Self Managed Super Fund
This is a great option for small business owners because under superannuation law, they’re typically allowed to use the property as their business premises.
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