No, it wouldn't include principle as as this th $301,000 that you are paying back. But it would include interest.

Beneficiaries get sued all the time. But if the trustee gets sued then it won't affect the beneficiaries.

I think you need to seek some legal and tax advice about your particular set up as there are many other issues to address.

$1500 pw = $78,000 pa

To get $78,000 pa on a rental yield of 4%:

= $78,000/0.04

= $1,950,000

So you would need about $2 million worth of unencumbered property to get $78,000 before tax if you were getting a yield of 4% after paying costs.

Yes, don't have a trading company as trustee.

You could have two trusts with separate trustees. One trust could own the assets and one trade. This is what they call a service trust and it is a way to divert profit from teh trading trust which is higher risk of being used. The trading trust would pay the service trust a fee for the use of the assets and this would be a deduction to the trading trust. This would divert income to the second trust, the service trust which would then use it to offset the deductions from depreciation.

I

Still not sure what you mean about offsetting business income. But a trust earning $100,000 in income with a $20,000 deduction for depreciation will result in an income of $80,000. So instead of getting $100,000 income to distribute you have $80,000 hence you have still reduced your income of the business.

This would depend how you do it.

If you transfer for under market value or reduced consideration then the claimback period is 4.5 years from memory. But if you do it with the intention to put the assets out of the reach of creditors – such as for asset protection reasons – then there is no limit on the clawback period.

You also have to consider the practical side of things. Is a trustee in bankruptcy going to come after you for this at all in say 6 years for a transaction that was valued at say $50k?

This wold depend on which state the assets are in and what assets they are.

Yes, price is locked in. And recently many off the plans have been coming in with valuations low. This may be due to a few reasons such as:

1. Developers selling off remaining stock at a discount just to get rid of them.

2. Developers and/or agents inflating prices initially to gain high commissions

3. Market drop

What could happen is something similar to this:

buy for $500,000 with a 1 year settlement.

come to settle at the value is now $450,000

Bank is willing to lend you $450,000 x 90% = $405,000

The purchaser must still pay $500,000 so will need to find $95,000 cash.

The purchaser only budgetting for 10% of $500,000 = $50,000 so they are short by $45,000.

If the purchaser cannot settle they they will lose their $50,000 deposit and could be sued for the any loss the vendor may have suffered.

But you would still be paying the same amount even if the property decreased. The loan will decease in size with the LVR based on the value, but the purchase price the same. So if the value decreased then you may have to chip in a bit of cash.

Consider a drop of 10% – could you come up with the cash to settle if this happened?

Plan for the worst (and 10% may not be the worst) and then hope it doesn't happen.

Re borrowing for property in a SMSF, this is the ruling to read:

SMSFR 2012/1

Self Managed Superannuation Funds: limited recourse borrowing arrangements – application of key concepts

http://law.ato.gov.au/atolaw/view.htm?docid=SFR/SMSFR20121/NAT/ATO/00001

(if itnerested)

Best to take your finance advice from a finance broker and the legal advice from a lawyer.

There is no reason why using a trust would mean you cannot leverage your borrowing capacity. Trusts can still get high lvr loans and equity accessed.

Discounts may be affected as the borrower will be different to your personally.