Many property investors do not know their partnership from their LAQC, or their trust from their company, residential property experts say.
Thursday, May 19th 2005, 7:13AM
by The Landlord
Kiwis are almost obsessed with achieving financial freedom through buying property, but it seems many need to learn how to own their properties.
A recent survey by BankDirect and landlord magazine KPI found 38% of those surveyed owned their properties in their own names, rather than through family trusts, LAQCs (loss attributing qualifying companies) or partnership agreements, says KPI editor Gez Johns.
A further 37% had never had a chattels valuation which is necessary to claim depreciation tax relief, a key way to help pay for a rental property bought with a big mortgage.
Andrew King, president of Auckland Property Investors Association, says few property investors should hold their properties in their own name.
Sunday Star-Times asked King to explain the options open to investors:
# Owning a renter in your own name:
A no-no for King, even though it's the usual Kiwi way to own a renter.
The pros of this form of ownership are that it's clean and simple, and doesn't add to your legal bills.
You can claim depreciation tax relief on the asset (which you have to pay back, if you sell for a profit), and offset that against your tax in the year it is claimed.
If your investment property is loss-making, those losses can be used to reduce your income tax bills.
