The type of ownership structure you choose for your residential property investment is important.  There are implications for tax, asset protection and liability.

There are a number of options:

• Individual ownership
• Partnership
• Companies, including LAQCs (Loss Attributing Qualifying Companies)

• Trusts

Each has its own advantages and disadvantages. In this section we provide an overview of each type of structure.  You should obtain professional advice on what structure is best for your individual circumstances.

The key factors you should consider when deciding on the most appropriate ownership structure are:

• Your liability (protecting your assets) – the ownership structure can determine your liability if something goes wrong – for example if the property has dangerous electrical wiring, causing a fire which results in injury to a tenant and/or visitor, or damage to their property.  Asset protection can also be a consideration if you want to protect personal assets from business liabilities, or where you are entering a new relationship.
• Tax – the amount of tax you pay depends on the ownership structure you choose.  For example, some structures may give you the ability to ‘income split’ – i.e. to shift taxable income from someone on a higher tax bracket to another person (e.g. a spouse) on a lower tax bracket.  Some structures may allow losses to be offset against your personal income to reduce your tax bill.
• Ease of ownership transfer – ownership transfer is simpler in some structures than others.

Here's a handy summary (pdf) of the key factors to consider for each ownership structure.

The best option for you depends on your individual circumstances, and we recommend you take professional advice as the structure you choose may have important long-term implications.

This material is for information purposes only. You should seek professional advice related to your individual circumstances. While The National Bank has taken care to ensure that this information is from reliable sources, it cannot warrant its accuracy, completeness or suitability for your intended use. To the extent permitted by law, The National Bank does not accept any responsibility or liability arising from your use of this information. Our lending criteria, terms, conditions and fees apply.