Finance Structures for Individuals

Hi Aqualife

Remember you may not be single all of your life so you need something that can adapt with you.

My preference would a Discretionary Family Trust although such a structure will not assist in increasing your borrowing capacity.
 
As a Trustee you would need to disclose all loans which you Guarantee but a DFT will provide you with good Asset Protection.

A Unit Trust can also be used by an individual however many of the previous benefits have been eroded.

There is no limit to how many properties you can own within a single Trust but realistically to be on the safe side would probably limit it to 6 or 7.

I think if may help if you are talk about ownership structures rather than finance strucutres.

Expenses are claimed by the person or entity that owns the property so if you set up a DT it would claim all costs including depreciation etc. One disadvantage is that if there is a loss this loss is trapped within the trust and cannot be used to offset personal income. The trust can still negative gear if it has other income (ie income can be reduced by losses) but if there is no other income the loss can be carried forward until the next year – or until there is a profit to offset it.

Also these structures cannot help you borrow more because lenders will take personal guarantees from the people behind the trust and all loans and guaranteed loans of the entities and people involved will be taken into account.

For flexibility and safety it would be good to have just one property per trust, but it is up to you. This is because If the trust is sued all the assets of the trust would be at risk and having one per trust can help control losses if there are any – eg. keep a loss for a future year rather than use it up on a capital gain. Flexible planning.