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How to save money on your mortgage using a company name

How to save money on your mortgage using a company name

Many investors ask themselves: How can I afford an investment property when I already have so many expenses and costs to pay in my day to day life?

If you are running your own business or company, then there may just be an opportunity to minimise the amount you spend on property, while living in the home of your dreams.

How? By using a company name to purchase our home, explains Andrew Fawell, director of Beller Real Estate.

“A lot of high net worth people buy a house in a company name, then they ‘rent’ the property back off the company,” he explains.

“Then they negative gear the loss so the interest becomes tax deductible. It becomes an affordable opportunity to live in a better quality home.”

Using this, strategy, there will generally be a capital gains tax (CGT) tax liability when you do sell it.

For instance, when buying in your own name, you can currently access at 50% CGT discount when buying in your own name. You will lose this benefit when buying in a company name, but “most people tend to think the capital growth will outweigh the CGT opportunity”, Andrew adds.

“Structuring it this way allows for strategic tax management and also and asset protection. What that does as well, is it then allows them to borrow more money to leverage off other assets, to invest in property further,” Andrew says.

“You need to be pretty clear on what you’re trying to achieve when using this strategy.

“Is it an investment that you eventually want to live in? Is it a property you’ll live in then it will become and investment? Either way will put a different slant on it, and that’s why it’s really important to see the professionals, as they can actually help you to thrash out the details.”