Currently in the market for my next IP, but have found a couple of properties that have really piqued my interest. Getting the funds to buy 2 on my own probably wouldn't be possible because it would be a large loan of about $900,000+ and even though I'm young had would have at least a 20% deposit down on all the properties, should they be vacant for any period of time it could become very hard for me to service the loan and I'd say serviceability or lack thereof is what would prevent me from borrowing such an amount. Not only that, but I'd be so heavily geared that some of the deductions I'd be claiming would start being at just 15%, which isn't exactly ideal. A friend of mine told me a little about Discretionary Family Trusts and I must say from what he told me, they sound great! I was told a few things about them and was hoping someone could clarify whether they're true or not: 1. Rather than you being held solely responsible for a loan, it holds the trust and therefore all the people within it responsible for the loan. This means the lender takes into account the combined incomes, assets and expenses of all the people within the trust when determining your borrowing power. So for example if myself and mother were in a Discretionary Family Trust and wanted to get out a loan, it would take into account both her assets/income/expenses as well as mine, and because she owns her own home and has no expenses and I'm young and work full-time, together it would give us some decent borrowing power. This would be very beneficial for me as it would give me/us the borrowing power to buy the extra IP. Mum is getting old so banks are reluctant to lend her much money, and on the flip side I'm young but would already have a fairly large loan myself. Together however we shouldn't have any issues servicing the small loan, especially with an IP that is basically in the green from the get go. Essentially a trust would solve both our issues, she needs youth and I need equity. 2. When it comes to taxing the profit made by a trust, if it's a discretionary trust (are there any other kinds?) you can choose to allocate the income to whomever you see fit. So for example if someone within the trust was unemployed for that entire financial year and your assets made a profit of $6000 for that financial year, you could choose to allocate that amount to the unemployed person for that year and therefore pay no tax on it. Probably not all that beneficial in the short term as the property would be slightly in the red or making a very small amount of profit, but in the later years this could prove to be a very efficient option to have, especially when my mother comes to retire. We could potentially allocate all the IP income to her and pay very little tax on it as opposed to it being tacked onto mine and getting taxed at 30%+. 3. When your investments within a trust make a loss you can't claim them as tax deductions to people within the trust. Instead they just get offset against gains when the trust finally starts making gains. This wouldn't be that big an issue in our case, because the property we'd be buying would either be making a very small amount of money straight away or only be slightly in the red for the first year or two. Are these points indeed true? Is there any downside to having a trust like this? 4. Would anyone be better off buying a property with a joint home loan instead of via a trust, and getting multiple names on the deed? My understanding is that if you do things this way you don't get the option to pick and choose how much income gets allocated to each person, instead they get determined on how much of a % you claim each person owns on the deed. One thing that 'could' be considered advantageous that I can see is that you would be able to claim tax deductions on losses you make. In the short term could be considered beneficial, however in the long term or in the case where you have a property that is or would be making profit very early, it probably wouldn't make much of a difference because in a trust it would just offset and you'd essentially get the same savings. Very keen to learn a little more about these trusts as opposed to simply have joint loans and multiple names on the deed. Lastly - If most of what I've been told is true and doing things via a Trust is indeed the best way to go, how/where exactly would I get all this set up? An accountant? solicitor? bank? Would I just get the forms from somewhere and send them in or something? Big thanks in advance to any of you that post your opinions, they're all greatly appreciated. I'll be sure to keep everyone updated on my investment ventures once I get everything sorted.