TRUST STRUCTURING
When you build your property portfolio correctly and within the correct structure , you can build a significantly larger portfolio and pay significantly less tax .
In our previous article , How To Run Your Property Portfolio Like a Business , we mentioned that your property portfolio should be in its own entity with its own bank account and annual financial statements .
“ Try to build your wealth within trusts from the beginning , as moving your assets to trusts can become difficult and expensive , especially with a larger estate .”
So , what should your property portfolio ’ s structure look like ? Ideally , you want to own your properties in a company with a Holdings Trust holding the shares in the company . Alternatively , one can also hold property directly in a Property Trust . You ’ ll notice there is always a trust in the picture .
Below are the reasons to use correct structuring .
Financing Capability
When you approach the bank or an investor for financing or funding , they will take you more seriously because there is structure to your ‘ business ’. Also , since you are not applying for loans in your personal capacity , acquiring multiple properties and financing them becomes more likely . This enables you , over time , to build a significantly larger property portfolio .
Tax Benefits
Because of the structured approach , you will also pay less tax because when annual financials are prepared , income
144 OCT 2022 SA Real Estate Investor Magazine