Partnership or Limited Liability Partnership (LLP) to purchase Industrial B1 Property

[property_finder]

Hi fellow forummers,

Given a choice between Partnership, and Limited Liability Partnership (LLP) entities, what are the pros and cons of using each entity to purchase industrial B1 property?

Partnership
The property will be owned by the partners, and partners need to pay property tax.

Limited Liability Partnership (LLP)
Property is owned by the LLP and the property taxes will be paid by the LLP.

Which entity will you choose, and are property taxes similiar?

Thank you

[ikan bilis]

Property tax got nothing to do with partnership, LLP or individual/personal.
Property tax should be based on 10% annual value (market annual rental income), and got nothing to do with who owns it....

For rental income, think both LLP and partnership should be file under personal tax, and not company tax... and hence personal tax rate...

for offseting the 7% GST: any LLP, partnership, Sole proprietor, Pte Ltd can just be GST registered.

for transfer of industrial B1 property next time, could just make it as transfer of LLP, partnership company and saves the 3% property buyer stamp duty (or even there is SSD, ABSD next time)....

btw: i never buy property with LLP or partnership hor,... me small fish don;t have so complicated structure 1...

;)

[ikan bilis]

.... and my feeling is:

not much advantages i can think of in buying the property under LLP or partnership.

if you buy the industrial property under individual
- bank loan rate is better (may be sibor + 1.5% ??). if you buy under LLP or partnership, interest rate likely prime rate pegged and higher ??
- for individual, you can file all your expenses (agent commission, repairs, MCST charges, ineterest charges, property tax) when IRAS e-filing. LLP or partnership does not have much advantages.

Only advantage i can think of is evading of buyer stamp duty (or any future SSD, ABSD) when selling your property.

For GST, there could be some loophole: buy the property with a GST registered entity, offset the GST first. After that shutdown the GST of the company, and sell the property as no GST (... i not sure hor, please let me know if it works...)

let me know of any new things/findings after you purchase your property...
;)


btw: where is jwong71 ??...

[property_finder]

.... and my feeling is:

not much advantages i can think of in buying the property under LLP or partnership.

if you buy the industrial property under individual
- bank loan rate is better (may be sibor + 1.5% ??). if you buy under LLP or partnership, interest rate likely prime rate pegged and higher ??
- for individual, you can file all your expenses (agent commission, repairs, MCST charges, ineterest charges, property tax) when IRAS e-filing. LLP or partnership does not have much advantages.

Only advantage i can think of is evading of buyer stamp duty (or any future SSD, ABSD) when selling your property.

For GST, there could be some loophole: buy the property with a GST registered entity, offset the GST first. After that shutdown the GST of the company, and sell the property as no GST (... i not sure hor, please let me know if it works...)

let me know of any new things/findings after you purchase your property...
;)


btw: where is jwong71 ??...


If one buys property under individual, the individual must be registered under sole-proprietorship and get registered for GST to claim back the GST. Once GST-registered, whatever trades he conducts in the future (taxi-driver, tuition teacher, hawker, whatever...), he must impose a 7% GST, or IRAS will come after him.

The moment you shut down your company and de-register from GST, it is considered the same as selling the property, and you cannot pocket the GST, but must pay back the GST to IRAS (at the prevailing market rate - meaning if price rise, you pay back more GST to IRAS than you initially claim). The GST loophole a myth that property agents tell customers. No such loopholes here.

[ikan bilis]

when gst was first introduced, companies cannot de-register gst once you turn it on, except shutting down the company....

now?... somehow you can de-register gst leh...
http://www.iras.gov.sg/irashome/uploadedfiles/e-Tax_Guide/etaxguides_GST_Do%20I%20need%20to%20register_2012-10-01.pdf


anyway, heehee,... i paid gst for any commercial/industrial properties and made purchase under individual/personal name.... i do not want to help the govt collecting more tax (i helped to chop off the gst tax food chain ....:cool: ).. sometimes my tenants also small fish and non gst registered...

having fun searching your property and tell me more after that... :cheers4:

[property_finder]

having fun searching your property and tell me more after that... :cheers4:

Hello Mr. ikan bilis,
Thank You very much for your advice and suggestions. :cheers4:.

Currently, the FH industrial new launches in Paya lebar/Tai Seng area are around $1,100 /sqft for an areas of minimum 1300 sqft (comes with pool and recreational facilities), while the older FH industrial properties are below $900/sqft (but no pool and recreational facilities). Do you think prices of these older FH industrial developments (although no recreational facilities but relatively well-maintained and near to MRT) will rise to match $1,100/sqft in 3-4 years time?

[ikan bilis]

Sorry ah, i will not be able to tell if those 900psf will rise to 1,100psf in 3-4 years time.... :ashamed1:


But,... you might want to look at the yield/rental rate between new & old fh, and analyse a bit...

old fh rental: most of the older fh are run down and poorly maintained. try go down and take a look at lh60 ubi techpark and use it as rental guideline. ubi techpark (near mrt) is quite well maintained, and can your older fh's rental match 10yr old ubi techpark ??... older fh might be at 2psf rental... (with loan, 2psf/900psf might be negative cashflow....)

new fh rental: those with pool and recreational facilities are new concept buildings and rental rate unknown. but could be 3-4psf vs ubi techpark's 2-2.5psf. and new fh also does not have problem of get burnt bcoz of en-bloc. if new fh is 1100psf, i won;t dare to buy any old fh unless it is <700psf... (with loan, 3.5psf/1100psf might be positive cashflow....)

Warning:
- i'm no longer that bullish on real estate. i'm not adding any properties now but not selling either. i could be giving you some bearish views, and not the correct person to answer you on market trend.

:rolleyes: ;)

[property_finder]

I am also concerned about begin caught in an en-bloc, especially when per sqft is now at its peak, and quite a few other FH industrial projects in the area have en bloc'ed over the years.

Thank You again Mr. ikan bilis, for your kind advice.