Family trust setup before 2nd investment property purchase?

Hi,

I own one property in QLD and wanted to buy another one in SA in the next few months. Now I was thinking if it wouldn't be better to create a family trust for tax purposes as my wife earns less and we could offset this with the tax as well as the protection aspect of a trustee account.

My first property is positively geared right now.

My questions to the experts would you recommend to register a trust or should I buy a few more properties first?

 

If you're only at a couple of properties, I wouldn't bother to be honest. Keep it simple to start with.

Land tax is the main reason for trusts in my opinion, and you wouldn't go over the threshold with 1 in each state. You can continue to avoid land tax by buying in different states or in different names, followed by different trusts after those options are exhausted.

As for the bit about your wife earning less -> if its going to be a positively geared IP maybe put it in her name. Have a think about whether that'll always be the case. Ie, will she always earn less? Will the property always be negative/positive?

 

This depends on your circumstances and goals. You should seek legal advice as income tax is only one of about 15 things to consider.

 

Good advice I'll probably keep it simple as you say and get some more properties first before going the family trust way. And yes I think my wife will always be on the lower pay side since she works in retail and isn't planning on moving anywhere else. I'm only looking into positive cash flow properties as I am planning long term and not planning on selling any of my properties. Hope I can achieve financial freedom by 50 which is in another 17 years.

 

Keep at it, I'm sure you'll do well