With a company new investors can be introduced by transferring shares without triggering stamp duty in most cases, so it is more flexible in this regard.

Beware – lots of confusing comments in this section.

1. Don’t draw it down. If you borrow to pay off the main residence loan the interest won’t be deductible and your $120k split will be a mixed purpose loan.

2. With extreme care. If you pay for something with cash and then take money from the loan the interest will not be deductible because you have just borrowed to reimburse yourself. Mixed loan issues too,

You need to pay the vendor directly from your loan account – which may be difficult.
An alternative is to use a credit card to borrow to pay for the items and then refinance this loan with the bank loan. You must not have any other private expenses on the card when doing this – or the card will be a mixed purpose loan.

3. Bloody oath. Have you sought tax advice? Property first used to produce income could reset the cost base to market value at the date it first earns income.

With serviceability it is not a matter of which lender, but the situation and the structure.

Land tax is too complicated to list the differences across all states. Even comparing 2 states is complex.
In QLD each trust could get a separate threshold of $350,000. Same with companies.

The answer to most who ask me should they use a trust to own property is ‘probably not’.

The risk of being sued is overstated by spruikers who try to make money out of selling trusts – most of them unqualified too.

Tenants can and do sue, but it is very rare. I have been investing in property for over 20 years and no tenant has ever attempted to sue me – except perhaps in the tribunal over minor lease disputes. But hold a property in a trust won’t protect the property because they will sue the owner of the property which will be the trustee. Trustee is indemnified out of the trust assets so all the assets of that trust will be at risk – but your personal assets may be at risk.

I think the great danger would come from if you are in business. There are always disputes in business so this can be very risky. But I have been self employed for about 15 years and never been sued. I have had some disputes, but never that serious. But I have sued a client in court myself. That is risky potentially as if you lose you could be up for costs.

I advise on asset protection a fair bit yet I have only seen about 5 or so people end up bankrupt. So it is pretty rare.

Keep in mind that there are other ways to ‘protect’ assets without those assets being held in trust.

Yes valuers actually can tell you what it would have been worth at any point in time.

It could also be exempt from CGT for up to 6 years.

Benny – there is no declaring of which property will be the main residence – until the sale of one of them.

Why look at creating a trust?
Why pay PI on an investment property?

I think you should do some more reading.

This is legal advice so best to speak to a lawyer as it relates to state taxes.

See s 12 Land Tax Act
http://www.austlii.edu.au/au/legis/sa/consol_act/lta193690/s12.html

12—Tax in cases where there are two or more owners

(1) Subject to subsection (2)

, where two or more persons are the owners of land, the same amount of land tax is payable in respect of that land as if only one person were the owner.

(2) Subsection (1)

does not affect the operation of any provisions of this Act under which the value of land is aggregated, for the purpose of the assessment of tax, with the value of other land.

Hi Tony

I don’t take inflation into account because working in todays dollars should be enough as long as the property and rent growth is the same or more than the inflation the passive income goal should match todays dollars – or be better.

Work it out like this
1 estimate the yield of the types of property you are after
2. reduce this by about 1% for costs
3. Divide the desired income by the figure in 2

In this case assuming you get a 5% yield, take this as 4% after costs
$250,000 divided by 4% =$6,250,000

So you will need $6,250,000 worth of unencumbered property to get an income of $250,000 per year (before tax).

Now work out the average value of the property you are looking to get. lets say $500,000 properties
$6,250,000 divided by 500,000 = 12.5

So you will need around 13 properties valued at $500,000 (in todays dollars) all fully paid off to retire.

Of this may be 26 properties with 50% LVR loans perhaps.

Uncrossing is good, but it won’t help you pay off a loan any earlier.