12 Things You Need to Consider Before Investing in Real Estate

As a property investor, there is a lot to think about when purchasing luxury real estate, especially in the context of structuring ownership.

Utilising corporate structures like asset holding companies or trusts can offer significant benefits, including tax efficiency, privacy, and asset protection, but there are number of important things you need to consider.

1. Legal Structure: Choose the most suitable legal entity (e.g., limited liability company, partnership, or trust) to purchase and own your investment property based on the investment goals, tax implications, and legal protections required.
2. Jurisdiction: The choice of jurisdiction for your entity can significantly impact tax and privacy benefits. Consider jurisdictions with favourable tax treaties and stable legal systems.
3. Tax Implications: Understand the tax consequences associated with different ownership structures, including income tax, capital gains tax, inheritance tax, and stamp duty land tax. International investors should also consider double taxation agreements.
4. Asset Protection: Evaluate how the ownership structure can protect the property from potential future liabilities or creditors, ensuring your other assets remain insulated.
5. Privacy and Confidentiality: Consider the level of privacy each entity type offers regarding ownership disclosure. Trusts and certain corporate structures can provide anonymity.
6. Estate Planning and Succession: Assess how the structure facilitates estate planning and the seamless transfer of your assets to heirs, potentially avoiding probate.
7. Management and Control: Determine who will have control and management over the property. This is especially important in corporate structures or trusts where management may be separated from ownership.
8. Financing Considerations: Understand how the choice of structure might affect your ability to secure financing for the property purchase or development.
9. Regulatory Environment: Be aware of the regulatory environment, including anti-money laundering (AML) regulations and reporting requirements under laws like the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA).
10. Environmental and Social Governance (ESG): Aligning your investment with ESG criteria may be important to you. Consider how the property and its management align with these values.
11. Costs and Compliance: Be aware of the initial setup costs, ongoing administrative expenses, and compliance requirements associated with maintaining your chosen structure, including accounting and legal fees.
12. Exit Strategy: Plan for the future. Consider how the property will be sold or transferred out of your chosen structure, if required, and the associated costs and tax implications.

Each investor’s situation is unique, so it’s crucial to ensure that you obtain the appropriate professional advice before establishing any kind of structure to ensure it is fit for purpose and will yield the desired results.

At Sentient International, we understand that choosing the right property ownership structure is crucial when it comes to maximising your investment potential, minimising risks, and ensuring compliance with legal and tax requirements.

Our property team have implemented a variety of property solutions over the years, every one different in its complexity but each designed to meet the individual objectives and requirements of the client.

We have a wealth of experience and understanding in the acquisition, maintenance, redevelopment and sale of a broad range of property types worldwide, including serviced apartments, hotels, office buildings, student accommodation, offices, care homes and residential developments.

To find out more about our property services or to discuss any specific requirements, contact us at +44 1624 616544 or info@sentientinternational.com.