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Investment Financing - Properties bought under a company, Need to refinance some props for tax

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TSPai
post Mar 12 2009, 08:22 PM, updated 13y ago

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Dear forumers and mortgage agents,

Im thinking of setting a sdn bhd company and would like to refinance ALL my properties to this new company, mainly for tax reduction purposes brows.gif . Would appreciate if you guys can give me feedback on your experience on the following :


1. Which bank?

2. Maximum margin of financing allowed?

3. Any non-conventional requirements from the bank? (company vintage etc)



Many thanks in advance for your replies wink.gif

??!!
post Mar 12 2009, 09:00 PM

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Usually, if financed under company, the terms are slightly less favourable as compared to an individual....higher rates, lower loan margin.

For tax planning purpose, ensure the co. is deemed to be a property Company to qualify for tax deductions.
If RPGT is re-introduced, tax rate used is less favourable.
TSPai
post Mar 12 2009, 09:52 PM

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QUOTE(??!! @ Mar 12 2009, 09:00 PM)
If RPGT is re-introduced, tax rate used is less favourable.
*
why lah? hmm.gif


Care to elaborate?
ed0gawa
post Mar 12 2009, 10:03 PM

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1) Don't expect getting normal consumer interest loan rate. No BLR -2% for you.

2) Margin wise, am not really sure.

3) Document wise, erm have you gotten any property loan by using company name? It's the same basically. Stuff like company profiles, those registration forms, shareholders info (I/C, income tax, personal bank statement *is an extra*) . Income tax, audited account. Company current account statement.

Banks? To me, all are the same.
sam0919
post Mar 12 2009, 10:18 PM

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margin unlikely up to 90% and interest rate definitely not as favourable as consumer loan. Commercial loan ( under company name ) margin 80~85%. 90% subject to approval from management
WaCKy-Angel
post Mar 12 2009, 10:22 PM

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QUOTE(Pai @ Mar 12 2009, 08:22 PM)
Dear forumers and mortgage agents,

Im thinking of setting a sdn bhd company and would like to refinance ALL my properties to this new company, mainly for tax reduction purposes  brows.gif . Would appreciate if you guys can give me feedback on your experience on the following :
1. Which bank?

2. Maximum margin of financing allowed?

3. Any non-conventional requirements from the bank? (company vintage etc)
Many thanks in advance for your replies wink.gif
*
QUOTE(??!! @ Mar 12 2009, 09:00 PM)
Usually, if financed under company, the terms are slightly less favourable as compared to an individual....higher rates, lower loan margin.

For tax planning purpose, ensure the co. is deemed to be a property Company to qualify for tax deductions.
If RPGT is re-introduced, tax rate used is less favourable.
*
Yeah this is the 1st time i heard somebody trying to reduce tax by this purpose?
lolz using anything that is generating income would have much more tax/interest compared to private/individual person.
falcon867
post Mar 12 2009, 11:41 PM

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with regard o interest you can get maximum BLR -1.8%..average normal interest BLR -2.2%. Further the usual margin gven is round 80% except PBB up to 85%

Next you need to consider the fees of forming a Sdn. Bhd...and also the need to appoint a ompany secretary

further there is also legal fees to be incurred once you transfer the ownership of the properties ...

I believe there is some sort of saving with regard to taxes but you must weight it with the cons...gd luck!!

This post has been edited by falcon867: Mar 12 2009, 11:42 PM
meejawa
post Mar 13 2009, 08:51 AM

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QUOTE(Pai @ Mar 12 2009, 08:22 PM)
Dear forumers and mortgage agents,

Im thinking of setting a sdn bhd company and would like to refinance ALL my properties to this new company, mainly for tax reduction purposes  brows.gif . Would appreciate if you guys can give me feedback on your experience on the following :
1. Which bank?

2. Maximum margin of financing allowed?

3. Any non-conventional requirements from the bank? (company vintage etc)
Many thanks in advance for your replies wink.gif
*
I'm doing exactly this for abt 50% of my properties. Apart from tax reasons there are other excellent benefits which I'm sure you already know.

But remember, to refinance with the newco you will need to transfer all the properties to be under the newco, i.e. "selling" from personal name to company name. Because if not this way, the props will still be under your name, and it's your income which it will be calculated against, not the newco's. This is why I can't get all 100% of my props under my co. If you find a way I'll be extremely grateful if you can share notworthy.gif

For financing margin, there is NO DIFFERENCE between personal and company, that's what I experienced so far. The difference if if you PRUCHASE A COMMERCIAL prop, not purchase prop AS A COMMERCIAL entity. Hope that confused you enough, if not let me know. smile.gif

A good company secretary, accountant and tax person is vital. We can go to the nitty gritty when we meet up smile.gif, else feel free to ask here.
SUSjasonhanjk
post Mar 13 2009, 10:29 AM

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In layman term.

Properties under company, max tax is 20%.
Under individual is 26%.
b00n
post Mar 13 2009, 10:33 AM

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Wouldn't the problem now is the bank's assessment on your company? i.e. income/earning/profit generated by the company?
Without that, the banks wouldn't lend....no?
meejawa
post Mar 13 2009, 10:49 AM

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QUOTE(b00n @ Mar 13 2009, 10:33 AM)
Wouldn't the problem now is the bank's assessment on your company? i.e. income/earning/profit generated by the company?
Without that, the banks wouldn't lend....no?
*
What's the differece between this and for personal, in terms of checking? It's all about the ability to pay, versus the current commitment, and future projection of income. Sama lerrr...
TSPai
post Mar 13 2009, 12:00 PM

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QUOTE(meejawa @ Mar 13 2009, 08:51 AM)
I'm doing exactly this for abt 50% of my properties. Apart from tax reasons there are other excellent benefits which I'm sure you already know.
Fantastic, I can really learn from you then thumbup.gif

Other excellent benefits? hehehe...........looks like I can hide nothing from you tongue.gif

QUOTE(meejawa @ Mar 13 2009, 08:51 AM)
Because if not this way, the props will still be under your name, and it's your income which it will be calculated against, not the newco's. This is why I can't get all 100% of my props under my co. If you find a way I'll be extremely grateful if you can share  notworthy.gif
Why cant transfer all of your properties to the company? Does the bank requires that your company to be extremely profitable before such transfer can be financed?


QUOTE(meejawa @ Mar 13 2009, 08:51 AM)
For financing margin, there is NO DIFFERENCE between personal and company, that's what I experienced so far. The difference if if you PRUCHASE A COMMERCIAL prop, not purchase prop AS A COMMERCIAL entity. Hope that confused you enough, if not let me know. smile.gif
Seriously? U r talking about 90% MOF right?


QUOTE(meejawa @ Mar 13 2009, 08:51 AM)
A good company secretary, accountant and tax person is vital. We can go to the nitty gritty when we meet up smile.gif, else feel free to ask here.
*
Sharing is caring wink.gif
meejawa
post Mar 13 2009, 01:39 PM

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QUOTE(Pai @ Mar 13 2009, 12:00 PM)
Fantastic, I can really learn from you then  thumbup.gif

Other excellent benefits? hehehe...........looks like I can hide nothing from you  tongue.gif
Why cant transfer all of your properties to the company? Does the bank requires that your company to be extremely profitable before such transfer can be financed?

Seriously? U r talking about 90%  MOF right?
Sharing is caring  wink.gif
*
Can transfer, budden have to pay all the stamp duty++ fees..which is really the high laa.. smile.gif

The MOF is between 80 and 90% that I got. The reason for this is I am the director of the company, so I can actually be the guarantor for the loan, so my income can be taken into consideration. If looking purely from the company's PnL mine is almost nil wink.gif. Oops..mebe already terlebih cakap biggrin.gif
DriedIce
post Mar 13 2009, 03:54 PM

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QUOTE(meejawa @ Mar 13 2009, 08:51 AM)
For financing margin, there is NO DIFFERENCE between personal and company, that's what I experienced so far. The difference if if you PRUCHASE A COMMERCIAL prop, not purchase prop AS A COMMERCIAL entity. Hope that confused you enough, if not let me know. smile.gif
Is this example what you mean?:

A buyer takes a shop loan (commercial loan) under personal or company, the MOF will be lower
a buyer that that takes a housing loan under personal or company gets the same MOF regardless of whether personal or company.

Did I get that right?

This post has been edited by DriedIce: Mar 13 2009, 03:55 PM
meejawa
post Mar 13 2009, 04:26 PM

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QUOTE(DriedIce @ Mar 13 2009, 03:54 PM)
Is this example what you mean?:

A buyer takes a shop loan (commercial loan) under personal or company, the MOF will be lower
a buyer that that takes a housing loan under personal or company gets the same MOF regardless of whether personal or company.

Did I get that right?
*
B I N G O ! Not only the MOF is less, the rates are less favorable too... shakehead.gif
livingmonolith
post Mar 13 2009, 04:37 PM

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QUOTE(meejawa @ Mar 13 2009, 04:26 PM)
B I N G O ! Not only the MOF is less, the rates are less favorable too... shakehead.gif
*
so it means as long as we're dealing with residential properties it'll be the same except we get taxed less right?

great thread pai, and really good information from meejawa. thanks for bringing this topic up, i've never contemplated this method with properties. smile.gif
TSPai
post Mar 13 2009, 04:39 PM

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boss meejawa, called a few bankers, stanchart, uob, pbb and cimb all can give approx 80% margin only for residential properties bought under company. They say 90% is impossible leh...... sad.gif
SUSjasonhanjk
post Mar 13 2009, 04:47 PM

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I believe there are private bankers that work with investors, 90 to 100% loan is possible.
TSPai
post Mar 13 2009, 05:06 PM

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QUOTE(jasonhanjk @ Mar 13 2009, 10:29 AM)
In layman term.

Properties under company, max tax is 20%.
Under individual is 26%.
*

the idea is to pay zero tax tongue.gif


Added on March 13, 2009, 5:17 pm
QUOTE(jasonhanjk @ Mar 13 2009, 04:47 PM)
I believe there are private bankers that work with investors, 90 to 100% loan is possible.
*
u know anyone? smile.gif

This post has been edited by Pai: Mar 13 2009, 05:17 PM
meejawa
post Mar 13 2009, 06:09 PM

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QUOTE(Pai @ Mar 13 2009, 04:39 PM)
boss meejawa, called a few bankers, stanchart, uob, pbb and cimb all can give approx 80% margin only for residential properties bought under company. They say 90% is impossible leh...... sad.gif
*
Bigboss pai,

All depends on the banks, especially nowadays hor banks are so reluctant to give >80% financing, not because they can't due to purchase under company, but because the max margin itself that they can give. What to do, blame everything on amelika la hahahah

In good times, they can give up to 90% (I didn't ask for more la..should hor? smile.gif). Foreign banks are more flexible in this regards (if follow rules la)..If no follow rules you can get >100% with local banks also, but rate sucks laa..and "more upfront investment" brows.gif

SCB always give low margin wan, but they're my fav bank, citi and hsbc also similar, but all can haggle wan with the approving managers.


Added on March 13, 2009, 6:14 pm
QUOTE(livingmonolith @ Mar 13 2009, 04:37 PM)
so it means as long as we're dealing with residential properties it'll be the same except we get taxed less right?

great thread pai, and really good information from meejawa. thanks for bringing this topic up, i've never contemplated this method with properties. smile.gif
*
Correct correct (can oni say twice if not become lingam d biggrin.gif )

I also quite new la using company, abt 2 years oni, but I've been very very malas and inactive in property scene for a while now. I've been following pai's comments in a few other threads and are sure that I can learn much from him. Now that the economy so "bad", it can actually be turned upside down to become "good".

Oni need 2 ingredients:

1. CASH
2. HOLDING POWER

The recipe pulak is always same same, keep repeating it until you become automatic millionaire biggrin.gif


Added on March 13, 2009, 6:15 pm
QUOTE(Pai @ Mar 13 2009, 05:06 PM)
the idea is to pay zero tax tongue.gif


Added on March 13, 2009, 5:17 pm

u know anyone?  smile.gif
*
It's also possible to pay zero tax without companies, I incur expense around 5k a year to just maintain the company with almost zero transactions....( need some calculator with more digits..) smile.gif

This post has been edited by meejawa: Mar 13 2009, 06:15 PM

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