Cheers to you all for your advice and ideas.

Terry, thanks for your offer. We are in Newcastle so may be a bit hard to catch up for lunch :o). appreciate your advice though. Great idea to sell the PPOR. The problem with that is we absolutely love our home and will never move. Took us ages to find the right house in the right area for a price we thought we could manage :o)

Shape, cheers for your HUGE reply. Much appreciated. However I don't understand one bit about the offset account. This is basically how we have everthing set up now. Even with everything setup with the offset account etc we are still forking out a huge mortgage repayment on our PPOR. We have to get rid of the debt.

Another bonus is that when we do sell, the CGT only applies to the profit from when the IPs were valued at the time my wife aquired them through her grandfathers Will.

Emptyvessel, I don't understand how it would help staying in the same situation but with my wife working less. ?? We are struggling with cash flow now so would that not worsen our situation ? Especialy with your next comment. You say to use all the equity we have to buy more property, but with my wife working less, how would this help us ?? Sorry if its a dumb question.

So, after speaking to many people and taking on board all of your replies here, we have decided that the disadvantages of setting up a trust etc, means we will sell the 2 townhouses. Which hopefully will leave us with a mortgage of $100k on our PPOR. We will then look at ways to minimise the capital gain next year by using some of Shape's ideas above.

Thanks again with all of your replies. Keep them coming though as they are all good to read.

I will start a new thread on how to sell IPs without using Real estates to save money on commissions !!