You will be basically refinancing one loan into two separate loans. Names on the loans doesn't really matter as it will be X borrowing and then onlending to X and Y to pay out the CBA.

A trust only takes half an hour to set up. It is a relationship evidenced via a deed. Some all you need, once you have worked out what roles people will play, is some signatures. After that your deed may need stamping, depending on the State it is established in (QLD never had this requirement in the past, not sure if things have changed). Usually you can set the deed up and worry about stamping much later.

Whether banks treat loans for trusts as commercial or not will largely depend on the trustee – if it is a company or not. I am not aware of any lenders that restrict lending to 80% for trusts.

Trustees can be liable and their personal assets at risk if they are sued in their capacity as trustee. Having a company is much safer – but whether you need a company or not will depend on what the trust is doing, eg if just investing in shares, then there is no risk. If investing in property the risk is low, if investing in business then the risk is very high. Having individual trustees also makes things easier in terms of getting loans.

Assets held in trust are also exempt assets for bankruptcy purposes, so discretionary trusts are very good for asset protection – no matter who the trustee is.

A family trust is just another name for a discretionary trust. Its not the name that is important but the wording of the deed, so you may have a trust called Smith Family Trust, but you could have non family members as beneficiaries as well.

Good question. Don't know the answer though!

I think the purchase price would remain the same with the money for the damages to be classed as income which could then be offset by the cost of the repairs – But I am not sure about this.

Was it a large amount? and did you or will you conduct the repairs?

LMI can be a bit like that. Try to keep enquiries to a minimum and just try to explain your way out of this one.

Yes – but you can only claim one main residence at any one time.

I am not sure, that is something that you should discuss with your accountant. There is a chance the ATO could look at it as some sort of scheme, so it may be wise.

Keeping in mind PBRs are only binding on the person who lodges the request look at this one. Look at the ATOs reasoning and you will get a good idea how it works:

PBR 83291
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/83291.htm

Hi Spiro

Compared to other countries (and to the old days here) I think Australia loans are very innovative. 100% offset accounts, LOCs, LOC + capitalising interest, 30 year terms, etc

Rememebr the old days, back to Jan Somers books even not that far back, there was only PI loans and maybe IO loans if you were lucky – and that was it.

or just get the parents to onlend the 20% to you.

yes its legal.

Legal implications would include to make sure the trustee is acting in the best interests of the trust. You could do this by making sure everything was done properly at commercial rates etc.

Tax implciations would include taking into account any losses would be trapped in the trust. If there are losses then you may need to consider a family trust election. Loss of CGT exemption and payment of land tax.

Also consider the trust supplying furniture etc. ie rent if furnished.