Tips and advice

I also would recommend a IO loan with an offset. Using PI means you are paying down the loan and have less cash available for a new PPOR later on.

Having multiple trustees is not good from an asset protection pov, but you can often have relatives guarantee trust loans if need be as they are beneficiaries of the trust. Having a company as trustee also makes things more flexible as shareholders/directors can be added and changed easily.

You can't set up a trust after you have purchased – or you will need to sell to the trust. it is easy to do but costly as you will have to pay stamp duty and probably CGT tax as well as legals and loan exit and app fees again.

hi John

Just do the sums for with a trust and with the place in a personal name. (although remember tax is just one aspect). If there is a loss see how long it will take to turn around. Factor in any tax savings you would have in your own name – buying in your own name could mean you can get another one sooner too.

Then research trusts more, become familiar with all the roles in the trust – appointor, trustee, beneficiary etc. Learn as much as you can and then go and see an accountant to see if they recommend setting one up. By this time you should be able to follow their reasoning on why you should or shouldn't and you may know enough to know if they know enough!

hi John

80 Years is a long time and it will probably be your grandkids getting the property then. When the trust must vest or wind up the trustee distributes the trust assets to the beneficiaries. At present some states would be stamp duty free, not sure about CGT it would probably be payable though. Remember taxes/stamp duties etc are likely to change before the time comes. The beneficiaries then own it outright and can do as they please with  the asset.

This law, called the law against perpetuities, is designed to prevent rich families from locking up assets long term over many generations.

JUst think of your trust as a third person. Lets call him X. If X has a loss you can't claim it against your income. Its his to keep until he can make a profit. But you could lend him the money or gift him money to keep him afloat until the profit comes in.

Hi John

1) In a trust structure is it possible to use the equity of a property for personal use or as a deposit for another IP?
I assume you mean where the property is owned by the Trust can you access the equity. Yes just make sure you split the loans so each can be identified.

2) If the equity can be used can it be used to pay back a debt on an existing negatively geared property to make it positively geared?
Yes but there would be no sense in doing so as the interest on the loan raised on the other property would negate the benefit.

3) Does borrowing the equity from an IP increase the loan repayments of that loan or is it just borrowing against the equity and is a different loan all together therefore having its own repayments?

It depends on how you structure it. You can either incresae the existing loan or take out a secondary loan. The later is certainly a lot cleaner and therefore would have no bearing on the original loan repayments as it in turn would have its own commitment.

Hi John

Yes it is but i am unsure why you would want to.

Using an interest offset account will reduce the interest charged however still protect both the access to the cash funds and the interest deductability in the case you decide to want to buy a PPOR.

No you are right the separate loan sits in behind the first loan and does not effect the payments. Has to be with the same lender of course.