The simplest way to structure property ownership is in an individual’s name. It means that all income and capital proceeds on sale go directly to the owner of the property, as do any tax benefits. It is the owner who incurs the costs of purchase, depreciation, management and maintenance. There is no opportunity to distribute income or gains to another person without it first being declared as part of the individual’s income.
The risk is, that should the owner be declared bankrupt or open to any legal proceedings, the property is seen as a personal asset and available to be liquidated to satisfy creditors.
Module 3 discussed in detail the need for careful tax planning and the tax advantages and disadvantages that enable a decision to be made about how best to structure ownership. That module also examines different types of loans and ways of financing the various stages of property ownership. Module 3 should be revisited when you are analysing an individual client’s case.