"Helping you get what you want
and protecting what you've got"

Ungaro&Co

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PHONE 09 360 2179

Frequently Asked Questions

Is property investment a smart way to build wealth in this current climate??

Absolutely! – in fact it has never been a better time to invest in property. Property prices will rise and fall and so will interest rates, but for a couple of reasons, property investment may be a wiser way to build wealth because:

In most cases in NZ (still), capital gains are still non-taxable with property. You must be clear from the start though that your intentions are not to ‘trade’ in property, but to have a long term ‘investment’ instead.
Expenses relating to the holding of investment properties are usually tax deductible – this includes your biggest bill – interest cost
Investment property ‘Losses’, can be transferred to you (through an LAQC or through personal ownership), to offset your personal income, which lowers your overall tax bill. You have an asset that is increasing in value, and you have capital gains eventually, that should be tax free – a win-win situation.

*Disclaimer: We do not provide tax advice – please refer to your accountant for more specific information relating to tax issues

What are some of the ways that we can obtain finance for investment properties for you??

If you already own a property, in some cases you can ‘leverage’ off equity in your own property in order to obtain funding for the next property. In these cases, you need not put any cash into the new property, providing you have sufficient overall equity in your overall portfolio.
Investment property loans are not normally any more expensive than owner-occupied loans – providing it is secured over residential property. Just be aware that once you get past 10 investment properties or so, the banks will generally try to classify you as a ‘business / commercial banking’ customer – and different criteria and pricing may apply
When determining how much you can borrow for a rental property, the bank will take into account rental income on the proposed purchase, as well as your personal income.

What’s the best ownership structure??

Please seek the advice of an accountant and in some cases, your lawyer, when deciding how to ‘own’ any property. Following are some things to be aware of from a finance point of view:

Family Trusts: This form of ownership effectively ‘removes’ you from the equation and replaces you with another entity, the trust. The trust will usually have you as the trustee(s) with an accountant or solicitor as a professional trustee also. It is important to note that the banks will require a guarantee from the trustees of the trust – so you are in no way removed from your obligations from the banks when purchasing or borrowing through family trusts. The reasons behind why you would put a property through a family trust are numerous – usually to protect your assets from future relationships or from business risks – trusts are not often suggested for property investments but more so for the family home
Personal Ownership. This is the simplest form of ownership and the least hassle when it comes time to do your taxes – but there is some inflexibility around transferring tax losses if more than one person wants to receive a tax loss.
LAQC. Loss Attributing Qualifying Company. Talk to your accountant to see if this is the best way to purchase your property (if you do not have an accountant, we can point you in the right direction). It can be a great vehicle to transfer property investment tax losses to offset personal taxable income. There are a few more steps involved when purchasing and borrowing through LAQC’s (or even family trusts), but its not that hard and we can help you navigate through this if this is right for you.

Disclaimer:

We are authorised to give advice on catagory 2 products only under current legislation – this consists of residential lending and also insurance products like life and health insurance. We are not authorised to give advice on investments.