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Hmmm interesting dilemma.
Here is my non accountant, non lawyer view of this (Danger!, Danger!, Danger!).
The house you bought (or constructed) was for investment purposes (rental income). Hence you should be able to deduct the mortgage payments off your income tax. Get a loan (personal/family/anything really) to get it connected asap. Hopefully with the ability to deduct rent and the sewer pipe in place you can restart on new footing.
How much can u deduct? Well the mortgage on the investment property. The bank can tell you this (just tell them you are selling the investment property and you need a payout figure for that security), if they still refuse to tell you just use the amount you bought it for (speak to accountant). The ATO is mainly concerned with how the income is earned not your loan structures (Please Note – I am NOT an accountant!). Here is the form name from the ATO site, so you can deduct interest payments from your current paycheck – PAYG income tax withholding variation (ITWV) application.
If you are looking down the tunnel – I would do it regardless of the tax situation. Because given enough time, you should be okay.
Testamentary trust is the way to go.While it’s nice doing stuff for the children / grandchildren, it’s better if you control it. You don’t want them selling a property just to buy a 4WD! Build generational wealth instead!
Resettlement of the Trust can occur with the changing of the Trustee (and CG can result, however it depends on the State the trust was registered in and whats written on the trust deed), however unless you need to change the trustee regularly or setup a corporate trustee for a particular purpose it should be okay to leave it as it is (search for TerryW, hes pretty helpful at trusts, etc).
“My accountant has advised me that having our names listed as the trustees defeats the purpose of setting up one! Is that so?”
Um not really. The trust is separate entity from you. If you run the trust completely separate from your personal lives and business lives (separate bank accounts / trustee meetings / etc) it should provide asset protection. A trust also allows incoming splitting which means you can save money from the tax man (of course asset protection is always the first reason you give for having a trust!). So there are multiple benefits towards having a trust.
