Start with purpose, not a structure
The appropriate purchaser depends on the intended use of the property, expected income and gains, asset-protection objectives, financing, land tax, succession and the client’s wider affairs. No structure is automatically best.
The decision should usually be made before contracts exchange. Substituting a purchaser later can have duty, tax, finance and contractual consequences, and the vendor may not be required to agree.
Individual ownership
Personal ownership is comparatively simple and may permit access to concessions that are not available to entities, depending on the facts. It also places the asset directly in the individual’s estate and may expose it to personal risks.
Companies and trusts
A company can provide a separate legal owner and may suit some commercial activities, but company-held appreciating property can produce less flexible capital-gains outcomes. Trusts may provide flexibility in allocating income or succession, but involve additional administration, deed restrictions, finance considerations and state tax rules.
Land tax treatment and surcharge provisions require specific attention. The label used for a trust does not determine the result; the deed and legislation matter.
SMSF acquisitions
An SMSF purchase is governed by superannuation law, the fund’s investment strategy and strict related-party and borrowing rules. If limited recourse borrowing is used, the holding trust and transaction documents generally need to be correctly established before acquisition. Errors can be difficult to cure after exchange.
Coordinate the advice
Legal, tax, accounting and lending advice should be coordinated. A structure that produces an attractive tax result may be unsuitable for finance or legal-risk reasons, and vice versa.