Don’t assume that just because you’re talking to a Chartered Accountant that they know more about property tax than you do. Over the years, I’ve been surprised at how little some accountants grasp the most important aspects of structuring entities for property investment or even the basics of property investment itself.
A good accountant for a property investor would be able to sit with their client and discuss the pros and cons of possible investments, explain the reasons for the structures that they have recommended and assist the investor in planning future growth and management of their portfolio.
Here’s a couple of ways that you can tell your accountant is a good candidate!
Are they aware of recent changes to property taxes?
I sat in an accountants office nearly two years ago when the deadline for choosing a form of company to change to from the old LAQC regime was fast approaching. The accountant was telling me that they were recommending a LTC (Look Through Company) as opposed to a QC (Qualifying Company) because of the ability to write losses off against my personal income. It’s true that this would have continued to save me a little money every year in tax as the properties in this entity were running at a small loss. However, they had missed the big picture. I also had a family trust that I wanted to transfer the properties into at some point in the near future. Changing my LAQC to an LTC would mean that future transfer of shares to a trust would be a deemed sale and I would have to repay all the depreciation on properties within that entity. This would have cost me tens of thousands of dollars. Don’t be afraid to question the advice you’re given!
Do they understand your property investment goals?
Accountants are really in an unenviable position. They are expected (and often promise) to be a bean counter, a business mentor, a financial planner, investment adviser and confidante all rolled into one. No one can achieve all this with any degree of success without quality input from you, the client. If you want the best advice, you have to provide really good information. You won’t get great advice from an accountant who gets a shoebox full of receipts and five minutes of your time every year to discuss your property investments. Put in the time to give your accountant detailed information on your goals, current situation and investment preferences and you’ll get their attention and their best advice.