also http://www.chrisbatten.com.au

A company would be good as it allows limited liability which can protect the shareholders if things go wrong – the company is sued not the share holders. But a company is inflexxible as profits, or dividends, must be distributed in the percentage of ownership. Companies also do not get the 50% CGT discount.

A discretionary trust may be much better. Profits can be distributed at the discretion of the trustee each year, the 50% CGT exemption is available and there are many other benefits such as asset protection and estate planning issues.

You could have a
1) Discretionary trust with a company as trustee, or
2) a company with the shares owned by a discretionary trust.

Option 1 is probably better as you could get the 50% CGT discount.

If you are going to be getting a few properties, you may need a few structures, so best to seek the advice of a good accountant.

There are 100% IO loans available for owner occupied. St G also has a 100% loan with no LMI – but a higher rate.

If you are going to move in, and then out after 6months, it may be best to use as little of your own money as possible. This will keep your deductions high and free up money for personal use later on. Any spare cash could be put in an offset account linked to the loan, but not put into the loan (will cause tax problems).

But the more you borrow (the higher the LVR) the higher the cost of LMI will be. So you may need to consider your plans and the effects of increasing the deposit vs no deposit. eg. Putting in a 20% deposit may save you 3% in LMI – not a bad return.

Here is my take on your situation.

You seem to misunderstand the nature of a business. Just getting an ABN really has no bearing on anything. Assuming you are just getting an ABN in your own name, then you will be a sole trader. Income and expenses just go on your personal tax return.

Whether you can claim things depends on the nature of your business. Just having an ABN will not allow you to claim part of your house. But if you are making money in your business and use the part of the home as an office, you may be able to claim a portion of things such as rent, electricity, gas etc you may also be able to claim office equipment and tim tams and even toilet paper.
But seek good advice as claiming part of your home may mean you will lose the CGT free status of your house – saving a few dollars now could mean huge CGT bills later.

Rent will be income to the owner of the property. Having an ABN won't matter as either way it will be added to your own tax return.

There is no need for a separate bank account for a sole trader, but it may be better to keep business an personal separate.

BTW. discretionary trusts do not usually pay any income tax if the income is distributed. The beneficiaries are required to pay tax on their income and money received from the trust.

Hi

It may not be necessary to refinance. Just ask you existing lender for a new loan and then use this as deposit for the next one (or two).

Lenders will generally only lender on the lower of the value or the purchase price. So if the valuation comes in lower, there is not much you can do – maybe try another lender, or just put in the extra cash if you still think it is a goo deal.

Hi Sauber

Looks like that is for a commercial property – these are a bit different to residential with the lease looked at in more detail etc.

In your standard application you will need to supply many of the things included in this one such as company financials, personal financials, proof of income, proof of rental income etc. It is good to include a bit of a description of the property, but lenders will normally order their own valuations.

It is going to cost you dearly if you want to transfer property into a trust later, so it is best to decide straight away if you need one and then consider setting it up.

Many years ago when I started investing, I was advised to do one property in my own name to see how it went, and then if I knew I was going to keep going, to set up a trust then.

This may be good advice, but when you think about what could happen if you are ever sued, it may be best to do it straight away.

ps, I know many people who use one trust per property. ie they set up a new trust for every new property they purchase.

Excel has one in the templates section. Go open, new and it will be in there somewhere. If you cannot find it, please send me an email.

You can have IO with 100% offset with ANZ. Monthly interest will vary depending on the balance of the offset account and they will be able to take this varying amount each month from the offset.