Paul Glossop: Well welcome again guys to Pure Property Investment one on one. Today I’m here with Munzurul Khan. Munzurul is the principal at Keshab Chartered Accountants and today specifically what we wanted to talk about was, and I think is probably one of those really early pitfalls is, structures and names in which property investors buy property within. And I’m not going to lend the expertise, that’s your role and where you sit Munzurul, but I think a lot of the times we as Buyers Agents find that when we do get to the point of contracts sometimes the structure in which a property’s bought is not thought about until it’s too late, and once contracts are fully executed and it’s been lodged and settlement has occurred, it’s sometimes impossible, if not very expensive to undo those mistakes.
So Munzurul I was hoping you might be able to share some insights to our viewers about structures, importance of names, and different things people need to consider when buying an investment property.
Munzurul Khan: Well absolutely, absolutely. I suppose it’s the complexity of the structure and the different level of the structure that one has. And you’re right, all those comments that you suggested, I agree with all of those comments, that a structure whether it’s being thought enough. Whether it’s being thought enough, early enough, and whether the due diligence is being provided as such. Because there are many structures. Say one can buy on an individual name, one can buy in his name, one can buy on her name, one can buy it on a combined name, one can buy on family trust, one can buy on a unit trust, one can buy on a corporate entity, one can buy on a self-managed super fund, joint venture partnership and the list goes on.
So it is difficult, it is complex. So what’s the Golden Rule? I suppose if there is one golden rule: Run that through with your accountant. Run that through with your accountant before you sign that contract because there is no one answer. Depending on the circumstances you might buy it on his name because he’s higher on the income earning and the property is a little bit on the negative gearing and you want to climb the tax benefit as an example. You might want to buy it on a trust because of the asset protection. You might want to buy it on a self-managed super fund that you’ve already established. You may want to buy it on her name because the property is more positive cash flow, or the property that you purchased perhaps you want to do something with that property.
As an example, you want to build a granny flat, so you convert negative into a positive cash flow. So there are many, many, many, different things that you want to take to account. And you must speak to your accountant before you sign that contract so the accountant can look into your personal circumstances and advise on the basis of land tax, asset protection, longer-term planning.
Paul Glossop: Fantastic mate. I think straight away what you’ve done is you’ve probably, hopefully jogged a fair few investors thoughts and provoked some insights that probably a lot of investors weren’t really thinking about in the first place. And I think what you’ve said is twofold for me. One is understand why you’re buying this property and what the intention is, but before that even, you probably should know what your objectives are long-term. And having a plan and having a long-term strategy really should fold into why you’re buying this property and then secondly what structure, what name, what entity you buy that property within. I think the advice from Muzurul’s side is speaking to an accountant is absolutely vital.
But I think even more so is speak to a property focused account. Because accountants, just like every profession, are specialised in certain fields a lot of the time and someone who really understands property inside and out is super-important before you sign any contracts or any dotted lines.
So guys Munzurul’s details will be at the bottom of the screen feel free to contact him. You can also contact us for any reason. And if you want to set up that discussion and set up a strategy meeting feel free to do so and we’ll no doubt see you very soon. Cheers!