And Anthony from A4 Companies seems to know a lot about SMSF structures and investing.
https://www.propertyinvesting.com/forums/legal-accounting/4347022#comment-284017

I am a lawyer and could advise on the set up, but it is not something that I do everyday. But better to speak to Anthony I think.

Say you had a $300,000 loan with $100,000 saved in the offset.
You would pay interest on only $200,000. At 6% = $12,000 pa approx
The offset would save you $6,000 pa in interest.

Then you decide to buy a new investment property. You have 2 choices
1. Use the offset money for the deposit, or
2. Borrow the full amount

1. You withdraw $100,000 from the offset.
Your loan on the main residence remains the same, but now you are paying interest on $300,000 so this will mean $18,000 pa in total. None of this will be deductible.

2. You borrow $100,000 by setting up a new loan.
This means you keep your $100k in the offset saving you interest, but you borrow another $100,000 for the investment.
Therefore your main residence’s interest is still $12,000
But your new investment property’s interest is $6,000 extra because you have borrowed this money.
Your total annual tax deductions have been increased by $6000 pa by using the second method. This may mean an extra $2000 extra cash saved per year for 30 years….Compounding

I would only pay down the loan if you have a main residence fully paid off. Otherwise you will be losing tax.

And then if you have have a main residence paid off I would still rather use a 100% offset to store the cash as this will save you the same amount of interest but make the cash available for non investment purposes without affecting the tax deductibility of the loan.

ie if you pay $50,000 off the loan and then need to buy a new car you may have to redraw (= borrow) from the loan and this will cause the loan to become a mixed purpose loan (part investment part personal) and it wll mean you won't be able to claim the interest on the amount redrawn – whereas the offset method could have avoided this totally.

FHOG Pty Ltd is a great name Richard and you had some great foresight to register it in time.

The units of the unit trust which are held by the non SMSF entity could be used to raise capital. The units could be charged or used as security, but the SMSF owned units couldn't be mortgaged. But the SMSF could use a bare trust to borrow to acquire the units – but it would be very hard to find a lender willing to lend on this basis.

What about Nathan Birch's Blink Property?

Yes, if done that way the business aspect may be ok. If you are in Sydney I may be able to advise.

Mortgaging is a common term used to describe borrowing money (mortgage actually means taking a charge over property).

Obtaining a LOC is a form of borrowing.

If a tenant injures themselves in the property they are likely to sue the owner of the property which will be the trustee. If the trustee gets a judment then they must pay the tenant out of the trust assets if the trust assets are not enough then the trustee's personal assets are at risk. This is why it is best to have a company as trustee.

If you do something illegal or are criminally negligent then the company may not save you either. Directors of the company could be exposed.

If you are the trustee then you could be bankrupted. If you had transferred assets to a different trust then these assets could be at risk of being clawed back depending how it was all done.

I think it is generally preferrable to leave existing assets as they are and consider using a trust for future ones. Make sure you set up a discretionary trust in your will so that your spouse or children can inherit in a structure with asset protection and huge tax benefits…

Firewater. Very easy, but cumbersome. Work out how you are going to do it – gift, market value, undermarket value etc and then just fill in the relevant paperwork such as a transfer document from your names to the names of the trustee.

Apply for a new loan, pay stamp duty and then complete the settlement.

If it was your main residence before then maybe exempt from CGT. Full stamp duty would normally apply.

But, why are you wanting to do this? Asset protection is not great, you will be up for CGT from the transfer date and you may have to pay land tax on something that otherwise wouldn’t be taxed.