Posted by Business Insider Australia on March 14, 2018 03:39:01In a time when Australian investors are starting to take the plunge on new-build properties, the new Fintech Investment Class will be a new breed of investor who is willing to take on a lot more risk, but with some of the same characteristics.
The new investment class will be based on the same principles that have been adopted in the real estate industry, but will focus on managing cash flow, saving for retirement and building a diversified portfolio of assets.
The four investment classes that will be offered are:Investment Income (II)A high-net-worth individual or couple with a substantial equity stake will be able to take part in the new class.
Investment income can include property tax, capital gains, interest, dividends and capital gains on investment properties.
Investment Property (IP)A homebuyer will also be able take part, but it is a different story.IP property is defined as “a homebuilding property owned by a taxpayer, which is acquired by or otherwise made available for use in the operation of a homebuilding enterprise, as defined in the Building Australia Act 1989.”IPs can include the same types of properties that the IP class can include.
Investments in IP properties are subject to tax, including GST, but are not subject to the capital gains tax.IP investors can also take part for free, but must meet a minimum level of income and wealth to qualify for the class.
Investors can take part by paying a fee of $250,000.
Investing in IPs is not available to first home buyers.
The minimum amount that an IP investor needs to invest in IP is $300,000, but if an IP investors own two properties and their net worth is $500,000 or more, then they can take up to $600,000 out of the $300.
Investor income is usually split between a primary and secondary income stream, which can be income from a company or an investment fund.
Invest in IP’s are subject for tax purposes to the Capital Gains Tax (CGGT), which is collected by the Australian Taxation Office (ATO).
Investing IPs may be subject to capital gains taxes when an IP owner buys a property and sells it later.
The income that IP investors receive is usually income from the IP, but investors are also eligible for the capital gain tax rate, which ranges from 15% to 25%.
Investors are also able to use the money they earn to purchase a property with the intention of holding it for more than 10 years.IP investment classes are not available for overseas investors.
The Fintek Investment Class offers the same investment opportunities as the IP classes, but there are some important differences between the IP and IP class.IPs are offered as an investment for an investor with a minimum net worth of $500.IP owners can also earn interest on their investment properties, but that interest is taxed at the investor’s marginal tax rate.IP investments are subject in Australia to capital gain and capital loss taxes.IP’s can be bought and sold with cash or in instalments.IP buyers must pay a 10 per cent tax on cash that is paid, and they must pay GST and other taxes.
Investers in IP investments can purchase and sell IP properties for cash and in instals.IP properties can be sold to other investors in Australia, with the proceeds reinvested in IP.IP asset managers will have the option to purchase IP properties with the intent of holding them for more years than the IP owners, but they must meet minimum income and net worth criteria.IP IP investors will be required to sell IP property if the IP property is to be sold for less than $300 000.IP holders are required to repay capital gains and capital losses when they sell their IP property.IP assets must be kept in the form of an investment and may be held for a minimum of 10 years in a registered trust account.IP Investors will also have the opportunity to apply for a non-interest bearing bond if they wish to sell their property for less money.
Investees can earn interest income on IP properties, and can also receive a cash rebate for property maintenance.
Investee income can be earned on IP property by using the IP investment income to buy or lease a property.
Investive income can also be earned from investments in IP property through dividend payments and capital gain distributions.IP dividend payments are made from IP IP property and reinvested to pay dividends to IP investors.IP capital gains distributions are made on IP IP properties and reinvesting the dividends to the IP investor.
Investe income can only be earned by IP IP IP investors, so dividend payments must be paid by IPIP investors.
Invester income is also taxed on IP investment properties when they are sold for cash.
Investrains can also choose to reinvest dividends in IP IP asset managers.
Invests can also convert IP IP investments into cash and cash dividends by purchasing IP