And why have you posted that here? This is forum not an advertising board and the topic of this thread is Japan anyway!

Loans for land are available up to 95% LVR depending on the location. So you may need as little as 5% deposit. Most lenders offer land loans but some have a requirement that you must start building within 12 months.

There is generally no difference in applying for a owner occupied loan v an investment loan. Same rate and conditions etc. Owner occupied loans mean you may have more rights if things go wrong – the UCCC.

St George aren't allowing extra money out – over $10,000 – on the low doc product. 

Hi Daniel

$8,000 per year is a big loss!

Did you know that CG cannot be offset by income losses? I have never had an income loss so am not too sure how it works, but this is something you should discuss with an accountant.

What I think it means is, using your above example, you will have to distribute the $120k capital gain and still keep rolling over the income loss in the trust until other income can be used to offset it. The 50% CGT discount can apply to the CG if it is distributed to an individual.

Hi Daniel

You can set up a trust yourself for as little as $257 (or less).
You can set up a company yourself for $99 on the net plus the ASIC fee of about $400. Or you can go in to ASIC fill in some forms and just pay the $400.

You need to know what you are doing to do it yourself – there was a post here a few weeks ago by a person who set his own trust up and forgot to add the appointor.

I am not sure what the cost of a trust return is so much more than an individual.

Hi

I have a few clients who have used their services and I have spoken to Mike there many times. He is one of the most knowledgeable trust experts that I have encountered. Since the last time we spoke he has increased this knowledge by doing the Master of Taxation course at UNSW learning more about Trusts. All this comes at a price though and his fees are high.

Hi Daniel

Thanks for the update.

As you can probably gather I am a big fan of trusts.

You keep talking about HDT – but these don't really work and I think you should be looking at DTs as this is where all the tax and asset protection advantages lay.

Here is my response to your points:

1. Not true. All lenders understand trusts. They are very common and lenders deal with them everyday. They also understand hybrid trusts – these are nothing special, just unit trusts with a discretionary component. The problem is they won't accept them or won't accept the loan in a different name to the person on the title of the property.

2. With falling interest rates and high rents your properties will be only slightly negative cashflow. Therefore this should not be a major factor in holding you back from using a trust.

3. The running cost of a trust is Nil. All that needs to be done is a tax return. If the trust owns one property then you can do it yourself. Nothing hard or complex about that. Or you can get your accountant to do it for you. For a trust return it may cost $200 and slowly rise as your trust buys more property and the tax return gets more complicated. The thing is you would be buying the same investments in your own name anyway, so you would incur similar charges by your accountant to prepare your own tax return. If you use a company as trustee then there is a tax return for the company too – but this should be a nil return and there is an annual fee to ASIC of about $200

4. The majority of people may not use a trust, but do you want to be like the majority? What do the wealthy people do?

5. Getting insurance may help, but doesn't cover everything or every situation. Not many landlords get sued, but that is not what you should be worried about. You could get sued personally for a number or reasons if you are start a business the risk increases dramatically. You can be forced into bankruptcy through circumstances that are not your own fault.

6. Distributing income may not be relevant now, but what about the future? eg. your wife may take a year off work to have a baby, she may even work part time for a few years after that. Did you know each kids can earn $2666 pa tax free each year? If you were on the top bracket that means a trust could save you $1300 approx in tax per kid (and they don't even have to be your kids, most relatives under 18 would be covered).

And what about CGT if you were to sell? Like my example above.

—
One disadvantage with a trust is that you may pay more in land tax – in NSW it is about 1.7% of the value of the land above a certain threshold, think it is $320,000. But trusts do not get this threshold and pay land tax straight away. Other than this it is all positive i think.

And watch out trying to settle on the 24th – if it is delayed again for any reason you may have to wait weeks to settle over the holiday period.

Hi Daniel

It is possible to get other income into a trust and then offset any negative from the property – or you can let the loss roll forward to be offset by future gains.

The purpose of investing is to profit so I think you should look at the long term situation. Saving a few thousand in tax now by negative gearing in your own name could cost you tens of thousands in a few years.

eg. a mate of mine purchased a property in WA a few years ago. He was earning $100,000+ and his wife nil so he purchased in his own name. I advised him to look at a DT but he didn't. The property doubled in 2 years and he sold and had to take to full capital gain of about $200,000 after the 50% discount. He would have paid around $100,000 CGT while his wife was still on no income.

these are hard to finance and hard to sell and probably lower capital gains as a result