The ATO is concerned with anything that may save someone tax. It is still possible to do though.

see this private ruling for example:
PBR 83291
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/83291.htm

and
PBR Authorisation Number: 1011415913206
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/1011415913206.htm

See also this old TR concerning a unit trust – which they have concerns about.
TR 2002/18
http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR200218/NAT/ATO/00001

The trustee is the legal owner of trust property and its name goes on all title documents such as land titles, bank accounts, share certificates etc. With land the trust is not mentioned on any title documents, but with bank accounts you could have the account as trustee for the xx trust.

There is new legislation relating to anti-money laundering and anti-terrorism and so your bank may need to or try to indentify the trust and the people behind it, to a certain extent.

Get a LOC of up to 80% of the value, less existing loan. Make sure it is a separate loan.

Value $500,000
80% = $400,000
Existing loan = $100,000
So the LOC would be $300,000 max

Then the deposit and stamp duty etc should come from the LOC with the remaining coming from a new IO loan.

Talk to your accountant before you begin about using the LOC to fund the payments of the interest on your IO investment loan, and other costs, and then cash freed up can be used to pay down your non-deductible loan first.

You don't need a PIT trust to avoid vesting. All you need is a trust set up in South Australia, the only state in Australia without laws against perpetuities (but could they introduce laws in the next 80years????).

Also, having a property in a discretionary trust only provides limited asset protection. How well protected it is will depend on how you use it and structure it.

The idea of holding a property in a spouses name is good (and not necessarily the wife) but it can be argued, and has been argued, that one spouse is holding the property as trustee for the other, especially if the non title spouse is paying the loans – see Cummins v FCT.

I think owning in a trust can be very good idea, but the biggest drawback is the CGT issue. But this may be resolved by having another property as your main residence, under the absence rules exempting CGT. That way you get the best of both worlds.

Hi Stacey

Some good points, but also some inaccuracies.

You are confusing income with corpus. Any income of a trust that is not distributed at the end of the financial year will be taxed in the hands of the trustee at the top rate. So it pays to distribute!

But any assets of the trust – such as real property, cash in the bank, shares, stock (eg. items of a shop) would not need to be distributed. Paying PI on a loan should not matter – it just means less interest and therefore higher profits.

Generally you should distribute the trust income to the lowest tax payers in your family group until the point is reached when distributing any more to them would mean they are paying more than 30% tax. There after you would look at distributing to companies and capping the tax at 30%.

One trust can also distribute to another trust – subject to some rules, or earn an income from that trust by providing services. 

Assett doesn't equal stock and this doesn't equal profit. Just think if you had a cup shop and had $20,000 worth of cups sitting there unsold. This is not profit.

Not sure about the ATo allowing journal entries now without the actual movement of cash. I think it is better to have the distrbution paid and then lent back to the trust.

An ABN is just a registered business number. It is the entity behind the ABN that is the legal owner and that is what is important.

hi Nadaimee

I think you may find SMSF can't do this sort of thing. Property held by a SMSF is unable to be developed or substantially renovated. Any profit would also be locked in the fund until you are able to retire or take a pension etc.

The DT should be a good option and any land tax or negative cashflow initially shouldn't matter too much if you are selling and making a profit.

Yes, that broker doesn't know much – don't use him would be my advice.

Ask him what would happen if you crossed the loans and needed to sell one property but the remaining one had dropped in value?

Going guarantor would expose you and your assets if things went wrong. If your husband stopped paying the loan, then you would have to, if you couldn't your husband could lose that house, and if the sale of the house is not enough to pay the loan, then the bank could come after you and your assets.

Having a caveat won't help. This will only prevent your husband from selling or further mortgaging the property – and is still a good idea.

To protect your existing assets, there is not much you can do.

Also, you husband being recently out of bankruptcy would mean he would find it very difficult to get a loan.

Since both names are on title you will just have to treat it like a normal sale. Get a contract drawn up, find a buyer and both of you sign the contract as sellers. Both of you also need to sign discharge documents for the bank and transfer.