Ever wondered how the equation of property ownership vs business ownership can be improved?
Small business legislation.
As a property investor, we believe your income is not considered to be “small business”, BUT your “tenant” will most probably fit the criteria of “small business” and be able to make far greater deductions than a landowner when property related expenditure is considered.
The scenario of investment is going to be critical to the benefits offered and achieved, so we have identified 3 options below which explore the alternatives:
You develop and organise with an operator to enter a long-term lease – you then sell the property with a sitting tenant – purchaser would maximise their deductions by being the owner of a maximum level of plant, but no immediate deductions as small business
You develop and operate the centre in two separate entities – you provide a deductible contribution in cash to tenant entity – tenant installs the plant for the equivalent amount of the cash received – developer entity gets full deduction for cash and tenant gets full off-set deduction as all items under $20,000 threshold claimed in year one – tenant retains ownership of plant and can return to landlord at completion of prescribed event
You develop and operate facility in one entity and as small business operator you could take the full deductions for plant items under $20,000 in year one
To achieve your best returns, let us work with you and your accountant to find the best option for your situation and remember to get us involved early during the design process.
Prepared by PEP Solutions
Founder: Graham Upton
Contact Number: 0418 744 740