It’s best to avoid cross collateralising as it should make it easier to sell or refinance as you’ll only have one property as security per loan. The only problem is that you can end up with lots of loans, but each property is effectively ‘stand-alone’.

This certainly sounds like a valid strategy (mixture of +ve and -ve to offset each other) if it suits your goals. I don’t think anyone here advocates that there is only one right way to invest.

Rod.

What was the rent?

It’s generally best to set up the structure first as there will be costs (CGT, stamp duty) associated with transferring them at a later date.

Different properties may require different structures. eg: a negatively geared property may be best owned by a high taxed individual whereas a neutral or positively geared one may be best to be held in a…[Read more]

Briefly,

If you use a company then the company pays tax at the company tax rate (30%). The company can then pay dividends to the shareholders who then pay tax on the dividend at their marginal rate. The shareholders receive a tax credit for the tax already paid by the company. Companies can choose not to pay a dividend and instead retain the…[Read more]

I believe you’ll find that super funds aren’t allowed to borrow money.

Sounds right, maybe you shouldn’t access any amount greater than the agreed selling price under the l/o you have with the end purchaser. After all any capital gain greater than this amount isn’t really yours unless tha option lapses.

My understanding is that a discretionary trust gives you much greater flexibility than a normal family trust. With a discretionary trust distributions allocations can be varied according to individual tax situations each year. With a family trust the benficiaries ownership/distribution ratios are generally fixed.

I’ve been meaning to ask my accountant that for a couple of years and never got around to it. Maybe there’s some legal conflict of interest with the company both administering the trust (as trustee) and benefiting from it.

Hi Gracie,

The “standard” structure seems to be Family Trust with a company as corporate trustee (this is what we have). This offers greater legal protection than having an individual as a trustee. A second company should be able to added later as a corporate beneficiary if needed, you would need to ensure that the trust deed allows this.