Mark Hay
'Choosing the Correct Entity'

This Weeks Episode of Home in WA

Mark Hay



(08) 9225 7000

(08) 9225 7777

0418 953 742

28/118 Royal Street
East Perth WA 6004

Investing in Property
Top Tips with Mark Hay

Choosing the correct Entity

It is absolutely paramount that before purchasing an investment property that some thought is given to the entity within which you should be purchasing. The main factor surrounding this can be a combination of the following:

  1. Tax effectiveness

  2. Capital gains tax

  3. Further purchasing strategies for other investments

  4. Exits strategies

  5. And finally, keeping the asset safe if the particular investor is engaged in certain activities where his assets could be claimed against him in law suits etc.

By enlarge the most common method of holding property is via joint tenancy i.e. typically a husband and wife, and upon the demise of one party, the second automatically is bequeathed the balance.

Other forms of ownership can be tenants in common, propriety limited companies and superfund’s, which now a days can borrow and have even greater tax benefits. The most common outside of single ownership and joint tenancy is discretionary trusts. These are popular because at the discretion of the owners they can reallocate and distribute property gains and income of loses according to how they see fit every financial year. In all cases of creating the correct entity it would be beneficial for any prospective purchaser to discuss in detail with an accountant or similar advisers, bearing in mind the long term nature of property and the eventual accumulation of capital gains.

As with every good business decision, research, surrounding yourself with likeminded professionals and thinking through the full process, should ensure that the right entity is used in any purchase.

In the event that the wrong entity is chosen it can have much greater ramification of double stamp duty, to put into the correct entity, or capital gains tax being paid at a much higher rate and or negative geared loses, or income being incorrectly distributed, therefore, losing the great tax effectiveness. The final situation being if legal claims are made against the owners and it’s guarded appropriately.

For further information please feel free to go to or call Mark directly on 9225 7000.