Above you seemed to say that there was no loan on the CBD apartment. Are you now saying you are going to mortgage the apartment, borrow money and pay out the townhouse? If so you would be shuffling money around with no benefit.

I can think of a few strategies which could significantly save you some tax.

One is for you to buy your wife's apartment at full market value. Use the proceeds to pay off your townhouse. Charge the tenants market rent – even if you may have to gift them the money to pay. This way you get rid of non deductible debt, avoid stamp duty, save a heap of tax and are in a good position to invest.

Of course there are various steps involved and you should seek legal advice before implementing this.

You could have one big LOC but, this would mean it is secured by each property which is cross collateralising.

These sorts of issues arise in the early days when the investors are trying to get access to equity quickly, but after a while things will slow down as more property is purchased and harvesting equity slows down a bit.

ANZ will not deposit the borrowed amount back into the loan so you need a separate account.

I would still suggest a LOC loan and don't worry about having too many, these could be consolidated when more equity develops in the future.

s102AG ITAA36

income from a will or a trust set up on death is excepted trust income and taxed at adult rates. Can also apply for a child maintenance trust and income from insurance proceeds.

If you are divorced and pay to pay $20,000 in child support, you may have to earn $40k pa to pay this, but if you set up a child maintenance trust the trust could pay the children $20,000 and no tax payable. Many restrictive rules however.

Dying makes things easier as you could leave your extensive property portfolio to a discretionary trust set up in your will and the income to go to minor children – also reduces chance your spouses new partner getting at your money.

Hi M,

It doesn't really matter where you are, but where the property is located!

Children can earn $416 pa without having to pay tax – from inter vivos trusts. But make sure you have a trust in your will because they can earn over $20k pa and not pay tax for income received from a testamentary trust.

Hi Christine

I am in the process of writing several books.

One on tax

one on trusts

one on the tax aspects of interest

one of asset protection

one on succession

still got a long way to go, but hope to have the tax one done in the next few months.

Hi Manolo

I think you must have misunderstood your accountant as what you have written above is strange and wrong.

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.

The asset protection is not so secure. Directors of the company will need to personally guarantee any loan and if the investment fails the director(s) can lose their personal assets. If a tenant sues then you may be protected by the limited liability of the company.

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.

The property you are in now – is that in VIC? if so you could buy out your spouse for no stamp duty and increase deductions.

your questions are unclear.

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

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.

My thoughts are that you have probably not structured ideally.

Being fixed doesn't mean you cannot set up a new loan with the same bank – and Benny's suggestion is good too.

Finance should be structured under normal principals. Initially you would want to borrow as much as possible. Ideally 104%. Borrow the costs to strata title too.

Once strata titled sell off the units you want to and then split the loan so there is a portion for each unit. All loans IO and an offset account attached to the one you are living it. You may need advice on how much each portion of the loan will be. Probably won't be equal depending on the valuations of each units – ideally you want to attribute higher loans to the ones that will be investment.

So separate the loans first and then sell. Using the proceeds to pay down your PPOR loan first (or into the offset). If you sell first and then split you will end up with lower tax deductions.

Also factor in income tax and GST on the sale.

I don't think it would make a difference. Interest accrues daily but is charged monthly. So if you make a deposit to the loan account the day after interest is taken it will benefit you by reducing the principal until the next payment of interest.

But it won't be an issue with hte offset account.