OK that makes sense, thanks Terry and Dan.

So you can add beneficiaries without penalty down the track…? Or when it's initially set up have those family members nominated/ specified?

Terry – 'long term benefits'…you're alluding to the income and CGT benefits of trusts? Are there any benefits of trusts that I'm not considering? I want to try and understand them as best as possible. I've briefly read about property trusts/ Hybrid (benefits of neg gearing) but these seem rather complicated and not favoured by the ATO…I don't want to get into hot water at any point.

Am I wrong in suggesting that unless a property is neutral or in a cf+ position OR you have the intention of building a portfolio of IPs with the view to have them cf+ then trusts are really just an expensive structure for someone with say, up to 3 IPs of a relatively small value? (i.e. our 2 IPs are only valued around $420k collectively).

Thanks everyone, most helpful.

Amy

Ok that's great Dan, thanks. Yes, it seems we will have wins and losses no matter what path we take.

Can I clarify, when your children are of an age to be earning a decent wage and no longer great for dividing income amongst, is it easy to change the beneficiaries around? Or what would you do?

Also, are losses treated the same whether the trust is set up as an individual or corporation/ company?

Thanks again

Maybe that explains why my local broker hasn't returned my email???!!! If you have any room, you can take on mine as well

Sorry i thought Richard was a planner, not a broker but indeed he is! OK. Well in that case, another lender for IP2 is a strong option. Just to clarify, do most lenders require 80% LVR to avoid LMI but a higher LVR to determine the amount they're willing to lend you? (i.e. some lenders have 95% or more LVR). I'm just trying to work out if we'd physically have to contribute a deposit if our valuations come in lower than expected…can we push the lender to a higher LVR for the loan amount? Am i making any sense?!

OK now i'm getting confused!

Firstly, I know little about trust structures but thought that they lost most of their residential investor benefits a few years back…I'd need to read up on this.

Secondly, the point about title deeds is another area of questioning I have.
* IP1 is in both names due to originally being our PPOR however has not benefited us as an IP and being neg geared. If IP1 becomes pos geared in the next few years obviously this will change. The cost of changing the deed to husband's name only was too much when we explored that option. This will be treated as our PPOR for CGT purposes under the 6 year rule.
* For IP2 we're unsure of how to do this – it's likely to be pos geared within 2 years so should I have 100% ownership or should we explore a % split as tenants in common? My income is zero by the way, and will likely be for the next 5 or so years. Then when we eventually sell, what CGT considerations are there re: deed? (maybe this is an accountant q(?)

So, I'm asking for reiteration in lamen's terms

IP1 – Leave as is with IO payments and off-set a/c. Why bother with off-set for investment loan BTW? This works well for P&I loans but should I change this now that it's an IP?

IP2 – Create a split loan. Put the $15k money in advance in one loan and LVR 80% in other. We can avoid LMI on our conservative estimates this however need valuations done to confirm. Std variable loan.

I'm still not quite understanding the benefits of this structure entirely in my head…I'll mull over this more and hope that it crystalises!

Just to clarify, $210k is TOTAL loan amount including set-up costs and renos.

Our lender is State Govt Employees (SGE) – husband now a Paramedic (was builder). When they gave us approval for IP2 loan they said we could look at LOC as another option to off-set (as I specifically asked if this was available).

Considering a different lender for IP2 is something I'm open too given the potential savings. i definitely see the benefits of keeping the loans separate.

Yes, the interactions I've had with lending staff has been rather disappointing…I guess this forum helps to fill those gaps!

Thanks again.

That sounds like gr8 advice thx! I’ll fill in some of the info gaps 4u. Total loan of $210k includes $15k for immediate reno’s. CU have approved this amount. Husband is a builder but not his day job anymore so no issues w/ the lender. Thx 4 the heads up on population. We do fall in the under 10k bracket but lender hasn’t said anything 2date. Will check. Current IR is 7.14, obviously not that gr8 afterall. Does any of this new info change ur recommendations? Thx again!

Also, i forgot to mention that IP 2 is on a block over 1200sqm and the potential to subdivide in the future and build a home (husband to build) to either sell or hold is a consideration. Does that change any of your suggestions? Thanks again