How to Structure your investment portfolio or small business –
What are the best options for you?
For the Rental Property Investor
With one or several rental properties the structuring that the experts at Wise Advice recommend is the LTC or Look Through Company. The Look Through Company allows you to transfer profits and losses to your personal income which means that the tax you pay will be at your marginal rate.
The LTC is designed for entities where the shareholders hold the assets directly and carry on activities personally and in this way the structure will allow you to maximize the gains from your investment property by accessing any tax losses, or tax profits, your property is making and applying them to your personal income, the advantage being for you that the average tax rates are generally lower at a personal level than at the company level.
So, by off-setting any losses you make through you rental property, against the income you earn from other sources, you can reduce the rate of tax you pay. That means you can enjoy more disposable income.
For the Small Business Owner
If you are a small business owner, trading under your own name, then the LTC structure will allow you to access the lower tax rates, but still give you the benefits of limited liability. The lower tax rates are the difference between the marginal and average income tax rates. The small business owner would need to earn close to $180,000 before their average income tax rate exceeds the company rate of 28 cents in every dollar. The LTC is seen as a good proposition for small business owners.
The other options of limited partnerships, qualifying companies or sole trader structures may be what you want to pursue for your business and we will discuss all the options fully with you and arrive at the best solution for your future growth.
LTC set up could be as easy as picking up the phone
First of all, you need to decide whether the LTC option will suit you and the tax advantages will follow. Wise Advice’s expert accountants can help you make that decision, so get in touch today.
And if you decide that the LTC set up is the way to go, you won’t have to worry about any paperwork – we’ll get all the forms for you, help you fill them out, process them once they’re completed, and keep track of the progress of your application. This service costs just $450 (plus GST) per company.
Plus, once your LTC is set up, we can take care of all your IRD requirements as part of our rental property accounting service. And what’s more, our experienced advisors can also offer you a free mortgage review as well, to see if re-structuring could save you even more money.
