It’s common for buyers to purchase an investment property in their own name. But what you may not realise after the fact is that this might not be the best way for you to have purchased it. In fact, there are alternatives then just putting the property in your own name (what we call a “buying structure”) and knowing the implications of this before purchasing an investment property, could save you a few headaches down the track.
Why it’s important to buy an investment property in the correct name or structure:
When considering the various buying structures for your investment property, among other things, you will want to think about tax, and specifically practices like negative gearing, estate planning, superannuation and asset protection. After you’ve bought your investment property and put it in your name, a problem can arise. If you as the buyer want to change the name on the contract to purchase, in most cases, this cannot be done due to stamp duty implications, putting you in a bit of a sticky situation.
So to avoid this, we recommend all investors speak with an accountant before shopping for an investment property. This way, buyers can avoid making a mistake which could have long term expense implications.
Some buying structures to consider could be:
- Individual Name.
- Joint Tenants or Partnership.
- Tenants in common with ownership percentage.
- Company Name.
- Family Trust.
- Superannuation Funds.
Engage with a professional:
Buying a property in your own name is generally easier and less costly, however every buyer’s investment goals are different and an accountant’s advice could save you a lot of money during your ownership and on the sale of the property. If you’re about to buy an investment property, we highly recommend seeking professional advice from an accountant or financial advisor prior to purchasing.