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| IGrow Official Newsletter | Issue 37: November 2009 |
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| Don't Miss The Property Bus | |||
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01. We still have the fastest growing middle class in the world 02. We still have the highest crime rate in the world |
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The economic downturn has levelled out the over inflated prices to acceptable market related prices, which means properties are not going to be cheaper tomorrow than they are today. Our massive housing shortage is likely to increase due to the dramatic decline in building activity across South Africa over the past 2 years. Significant rate cuts and the down-sizing of middle class families to their financial needs are all drivers of the property bus. Another important driving factor is that banks have relaxed their lending criteria. Many IGrow Investors were able to secure 100 % financing on their property purchases over the past few months. This is a definite indication that the economic turnaround is evident. Many investors who I consult with, gives me the following reasons for not starting their property investment business immediately: |
 I first want to see what the interest rates do before i continue. |
| I will start once the prices have come down. |
| I will start at the beginning of next year when everything has settled down and I have received my bonus. |
| You only need 5 small, simple entry level properties to retire financially free, and if these are your excuses, you will never start. The right time is not yet to arrive, the right time has arrived. |
| Have you started your property portfolio? |
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The IGrow way of building a rental property portfolio is a business and under the current provisions of the Income Tax Act, our methods are very tax efficient, if it is properly set up and administered. The IGrow team of experts are resolute to the fact that the correct trusts be utilized as the entity of choice instead of a CC or Pty Limited. |
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The Companies Act and the Close Corporations Act have a number of requirements or provisions that strengthen the formation of these entities, specifically for their purpose, which is not ideal for residential property investment. A Trust is an entity which is established for the benefit of the beneficiaries. If your Trust Deed is correctly drafted, the beneficiaries will enjoy maximum benefit from the trustees as prescribed by the trust. |
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The advantages of a properly drafted and administered trust outweigh that of any CC or company by far and the benefits of such a trust cannot be emphasized enough. During trust consultations, many of your clients concern over the regulations and legislation implications on the tax side of trusts. It is important to remember that globally the wealthy has been controlled society and government for centuries and I firmly believe that nothing has changed, nor will it ever change. The wealthy own millions and billions of assets structured very neatly in different wealth protection vehicles called trusts. Most government officials and heads of government departments rely on trusts for their families and themselves as their preferred asset protection and tax efficient entity. If trust laws changes and impact us as mere mortals who own only a few entry level properties, it will certainly hit those who own millions and even billions in assets and investments much harder. We have seen the old adage of "one door closing means that another door will open", and if legislation around trusts changes we will see the benefits opening once again. Section 25 of the Income Tax Act allows for the distribution of income or gains to beneficiaries, who will then be taxed at their marginal tax rates. This is commonly referred to as the "conduit principal". A trust accountant that is a specialist in this field will assist you in the proper administration of your trusts to ensure that the provisions of the Income Tax Act is adhered to and the anti-avoidance provisions are not violated. When you as a trustee of your trust decide to sell your property, Section 56 of the Tax Act allows for distributions to be made from a trust to the beneficiary of the trust, and will be exempt from donations tax. These capital gains can also be split between the beneficiaries and could reduce the taxable liability substantially. This must be done with caution and with the assistance of a specialist accountant. Note that the anti-avoidance provisions of the Tax Act in respect of Distributions from a Trust to its Beneficiaries is comprehensive and requires thorough knowledge to ensure proper execution of tax minimization through the use of the ëconduit principalí. Other advantages are: |
| Asset protection (protection of your property portfolio) |
| Capital gains tax minimization and elimination |
| Estate duty benefits |
| Continuity |
| Protection of minors |
| No estate freezing (the trust does not die and lives in perpetuity) |
| New Benefit for Platinum Members |
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The IGrow group has launched a new initiative for platinum members, offering them a FREE Family Trust, Testament and Will (to the value of R5500) if they let our experienced Risk Planners structure their Life insurance correctly in a Family Trust. (*terms and conditions apply) If you have R1500-00 disposable cash flow left (after expenses) or if you have savings available and you qualify for a property loan, I will recommend that you get on to the property bus and start buying. This will be your first step towards financial freedom. The IGrow new developments are some of the highest quality and highest growth properties available on the market and we will asset you step by step to acquire and finance it correctly. Last Thursday we have launched an incredible new development for Platinum and Gold members. |
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| These properties previously sold for more than R700 000-00. The prices have decreased to R650 000-00 and we are now selling these properties for R550 000-00. NO DEPOSITS, NO TRANSFER DUTY, NO TRANSFER COSTS. This investments offers you a R100 000-00 equity in your investment from day one, break even point in year 7 and rental income of between R4300-00 and R4500-00. This opportunity is perfect for your property trust and an excellent investment. They are almost sold out, so investors need to jump at this incredible opportunity. If you book your unit before 20 November 2009, you might be in time to secure a fantastic opportunity. I would like to invite investors to a personal strategic property investment consultation to determine their affordability and what they would be able to buy and afford with the next few years. Your consultation can be booked in combination with our Trust Accountant, Trust Attorney, Risk Advisor and our Property Strategist. |
| Seminar News |
| Please join us for our last seminar of the year and take that vital step before the end of the year. Build your Property Portfolio before the boom! |
| Trust and Wealth Creation |
| Residential Property Market |
| Up to 100 % financing |
| Donations Tax, Capital Gains Tax, Property Tax and Tax incentives |
| Property Management and Rental Insurance |
| 100 % Property Ownership |
| FREE Consultations with our team of Specialists |
| Do not miss our Last Free Property & Trust seminar on Monday, 16 November 2009 at 18:30 at Bellvista Lodge, Bellville. (Booking essential) |
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See what our clients say about our seminars:
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