Q: I am thinking about getting into property investment. I want to know if it’s better to register a company or just invest under my own name? Are there any advantages in one over the other?

A: This is a very common question. At the outset I want to emphasise there is no “one-size-fits-all” answer here, and without other background facts I cannot give a bespoke view on what would be the best structure for you.

However, broadly speaking, a company would be preferrable to investing in your own name. Investing via a company provides a lot more flexibility. It allows for effective asset protection by having the shares in the company held by a trust. Capital you inject into your property investment activities is treated as a shareholder loan and that can also be protected under trust ownership.

There is flexibility from a tax point of view that you don’t get with personal ownership. For example, if a taxable profit is going to be generated, there can be benefit in being able to take advantage of the company tax rate of 28 per cent.

Personal ownership does not offer asset protection or the same flexibility. But I emphasise these are general comments only. When implementing a company structure there are decisions you need to make in terms of who holds the shares and what the tax classification of the company will be. This is where it’s important to get advice based on the specifics of your circumstances, so you get a structure that’s the best fit for you.

Matthew Gilligan

gra.co.nz