So you took some property investment advice, purchased a house and are now ready to watch the dollars come pouring in.
First of all, congratulations. You've joined plenty of other Kiwis who have found out how lucrative investment property in New Zealand can be.
However, simply buying a house is not the end-all-be-all of your investment journey. It's also essential to think about how you're going to structure your investment. This is especially important when it comes to taxation.
Tax season can be complicated enough without adding residential property investment to the mix, but with the right structure (and a little help from an experienced, knowledgeable accountant), you can reduce your burden and ensure you're getting the right amount back from the IRD each and every year.
Once you realise that amount can add up to between $5,000 and $15,000 annually, it becomes much easier to see how important structuring your investment is.
Eeny, meeny, miny, moe
Selecting which structure works best for your specific needs should not be a game of pick and choose. You need to work with professionals who can help you explore your options and provide you with qualified advice.
For instance, if you're part of a couple, one strategy that might benefit you is setting up a limited company to own your investment properties. This enables you to split the losses based on who pays the most tax. As a result, you'll receive the maximum amount possible for your tax return each year.
Another option is creating a trust, as this can not only help you with tax planning, but also assist with estate planning and asset protection.
The choice is yours, but you have to make sure you're actually choosing.
Here's to your financial independence!
Daniel Carney
Authorised Financial Adviser / Investment Property Expert