There are 5 major ownership structures in which you can hold investment properties, and each one has its pro’s and con’s. Tenants in Common is another ownership structure which can be used to maximise tax advantages and capital protection.
A tenants in common structure ensures that the ownership percentages between the parties is pre-set, whether that be equal or unequal percentages of ownership. Two common reasons for having this structure are:
Couples: This structure allows couples who are purchasing an investment property and want to set an uneven ownership split for tax purposes. An example might be where the higher income earner owns 90% of a negatively geared property.
Partnerships: Whether it be ownership between family members, friends or business partners/developers, this structure will ensure you each have a set ownership amount and the capital protection that goes along with that.
When a person owns an interest in a property as a tenants in common with another owner(s), upon the death of that person their estate continues to have an interest in the property. The deceased’s interest in the property will pass according to the provisions of the deceased’s will.
Short and long term plans, lifestyle, tax advantages and capital protection all need to be taken into consideration when determining the best structure to own your investment property in. As always, remember to speak to us on 03 8393 1000 before you purchase to ensure your ownership structure is suited to your individual needs.
Rebecca Mackie, Partner, Paris Financial
5 Investment Property Ownership Structures Article Series