Thank Johnny K. Yes it does make sense and i understand the principle behind. I just find difficult to clearly visualised the advantages of it. I like to see everything in a number and paper. Thanks to everyone for the comments.

The conclusion is that:
1) I am going to refinance the property 1: First. I am going to have one loan attached with an offset account for the outstanding debt in the property (this will represent non-deductable debt). Second, I will make a second loan secured by this property attached to another offset account containing the equity. Once i use the equity for a next deposit by having this two accounts i can separate non deductible from deductible expenses at the same time i will keep putting rent, salary any income into the offset of the first loan in order to reduce non-deductable debt. The second loan will be interest only and will be tidy and organise for when tax times arrive.

On the other hand. I will have a next loan for 80% of the second property. This new loan is going to be secured by the second property. This will ensure there are no cross collateralised. This is going to be also deductible debt. As a consequence the IP property will have 100% deductible debt.

When i move into the second property i will have to recycle debt in order to keep it tax effective.

I have not chosen to get a line of credit given that in my case i do not see much benefits and the interest rate are higher.

I welcome everyone any additional information.

Thank Jamie for your advice

Juan

Thanks Richard.
I have seek advice in relation to the structure and i given my situation i am going to purchase the property in my partner and my name. I already have advised the bank that i may use the equity in the property 1.
I regards to you comment to have a separate equity loan. I may not have that completely clear. Do you think that having a second offset account containing the redraw of the equity act in the same way than an equity loan. My understanding is that because i am going through refinances in the property first is that i have to take a loan for a higher amount and the equity can be ready to be withdraw or parked in an offset account. Any comments?

Juan

Thank Terry.

I was referring to the property.  I will think about it

Hi Terry. Thanks again. Probably i have to work in this matter. In order to follow your comments i have consider a few option along the next lines and i will try to clarify some unclear points.

The current property (IP1) is in my wife's name is in NSW.

Terry:"If the company is buying the property in its own right then the tax on the income will be fixed at 30%. The company can pay dividends to the shareholder which is the trust. But trusts cannot retain income (or be taxed at 45%) so the trust must distribute the income to beneficiaries. If you or your husband were to receive distributions you would pay additional tax. There is also no 50% CGT discount for companies so the company would pay at least 7.5% more tax than you would if a trust owned the property or your personally owned it. Also it could be much less."

Based on this, i do not see any point in buying in the name of a company in my situation. Do you agree?

Terry: "If a company or a trust owns a property then losses can only be offset by that company or trust. Similar if you buy a property in your name, you cannot use the losses to offset your husband's income. However, if you are self employed there is a way you can negatively gear in a company or a trust and that is to distribute from one entity to another – depends on how you are set up."

I was not aware of this. It is very interesting.  I am thinking that in my situation probably i should start clean using a trust as the entity to purchase my next IP2. Currently our source of income is 80% as employee and 20% of the income is as a sole trader. What do you think about setting a new trust and using my company as the trustee?. I am thinking that if in the future i buy 3 properties with 3 different trusts and the 3 trusts have as a director the same company i would be able to distribute the gains and losses. I have read somewhere that in this scenario if one trust incurred losses from one property…. then this can offset the gain of the other two IP-trusts structure, consequently evening the gains across the investing structure and therefore producing a more effective distribution across the beneficiaries. Is this right?

My apologies about unclear questions:

1 – if your husband owns the property you cannot claim anything.If a company or a trust owns it, same… Clear thanks.

2. what do you mean by profit? If you have money you could move that into an offset account. If the offset account is in your hushand's name then there are other implications but you could consider lending him the money or gift him the money to park in his offset account. – This answer my question. thanks. Based on what is discussed in other threads about offset accounts and structure, if my IP1 produce positive cash flow, then this money should be move to an offset 100% account. As a consequence  salaries, rent, tax return and other capital return are going to be parked in this offset account (ideally linked to my PPOR or in the property that i am living). I was concerned that from the tax point of view this can lead to some issues.

This is leading to another question I should've discuss this time ago with my accountant. What is involve in the process of re-using the money distributed to the beneficiaries  back into further investments?

HI Richard and Benny. Thanks for the feedback and suggestions. Makes more sense 

Richards in regard to LMI suggestions, if this refer to loan mortgage insurance, I have been advice by my broker that given my partner and I are veterinarians, we are entitle to 90% loan without LMI. We still are in favour of 80% loans for PPOR and we will consider 90% for IP and Yes we do have a 100% offset account. 

Thanks for the advice