I'd imagine it would be ok. The FHOG should only apply to whoever has their name on the title not who services or guarantors the loan.

It would be best to confirm with someone else though.

Hi Richard,

Is this because of the current conditions in the market, or has this always been the case?

Having all adult beneficiaries guarantee the loan wouldn't sit well with me. Even though I'm confident in my ability, putting others at risk for the sake of my own benefit is a huge concern.

Is it possible to have all these matters sorted out, like a pre-approval through a trust (without all adult beneficiaries as guarantors) before making an offer on a property?

Oh wait, I think I see where you're going.

You distribute enough income to your wife, kids and yourself to cover living/comfort expenses and then require all other beneficiaries to return their share as a gift to the trust. You then use the money placed back in the trust to invest further and much more efficiently since you haven't paid a large CG Tax.

The same would apply to the company. Which I believe (in your case) you distribute income to once the remaining beneficiaries have received a certain amount, thus keeping below 30% tax all up.

Hi Reno & Barnseee,

You should look up two of Steve's articles on depreciation and negative gearing:

https://www.propertyinvesting.com/depreciation
https://www.propertyinvesting.com/strategies/negativegearing

Depreciation is not negative gearing, you are only writing off the value of the home (fittings and fixtures). Be mindful as Richard said above, that when you sell after depreciation you are claiming a bigger capital gain which in turn results in more tax.

Hi Dan,

Yes, that's what I was trying to say.

When you said:

You mean to say that the Trust, in it's Deed, will define the Beneficiaries. While there will only be one Trustee which can be defined as an individual, group, or company with the individual or group members acting as director(s)? Forgive my ignorance here, but I thought the Beneficiaries were the Trustees, but this seems incorrect. They are actually two separate things?

And I'm not entirely sure what you mean here:

If I make a loss through the Trust, I will be limited to distributing future gains to family members only? So the company is kicked out so to speak?

Maybe it would be best to begin the Trust with family Beneficiaries only, and once the investment portfolio grows and contains income producing assets, create a new trust with a corporate Trustee instead. So making use of multiple Trusts as Richard pointed out earlier.

Thanks for the help Dan

Hi Richard,

Just to clarify… I understand the requirement of living in the PPOR for 6 months within the first 12 months of settlement. And that stamp duty is waived in NSW for first home buyers (sorry if I'm using the wrong vocabulary here).

What do you mean by rushing in with the setup of the Trust structure? In order to buy my first IP using the renovation method described above, I would need to purchase in my own name. Are you saying that setup costs for Trusts will increase with time? Even if this were to happen, what makes you say the benefit would deminish? Fair enough this will make a harder start, but in the long term it's well worth it in terms of asset protection (I'm not trying to sound rude here, I'm just excited about property).

Thanks

Hi Richard,

I didn't know you could fulfil the requirements of the FHOG without "living" in the property, as long as you're renovating it during that time. That could make things very beneficial for myself as I am yet to buy my first property.

At first I thought chasing this boost in the FHOG would be a waste if property prices continue to drop. i.e getting a $14K/$24K FHOG and losing $50K in the value of the property in the same year – there's practically no point.

But if what you say is feasable in NSW then that could allow me to enter the market a lot easier, complete a renovation during the first six months and then sell for a tidy profit.

Surely there must be certain conditions I'll need to check out before hand. Could you please point me in the right direction?

Oh and Barnseee, you should look further into depreciation, which is another tax advantage. And using trust structures to reduce amount of capital gains tax you pay, i.e. if the trustee of the trust is a company, tax will be capped at 30% on the dollar.

Check out this online article on trusts: http://www.propertyupdate.com.au/articles/149/1/Trusting-Trusts/Page1.html

Cheers

BUMP!

Time for some more good news I say

I thought the real sophisticated investors made more money in a depressed market as panic sets in for others.

I was expecting many on this forum to be excited about new strategies to tackle the current market and would happily share these views and opinions.

Alliance,

Steve's book 0 to 260+ properties was published late 2006