THE PROPERTY NERDS: Equity loans and trusts to boost property returns

In this episode of The Property Nerds, co-hosts Arjun Paliwal and Adrian Lee from InvestorKit, and Jack Fouracre from Fouracre Financial, are joined by Ronesh Hargovind from the Incentum Group to discuss how understanding equity loans and trusts can shape successful property investment strategies.

According to the co-hosts, understanding equity loans and trusts is essential for Australian property investors aiming to optimise returns and maintain tax compliance.

Trust structures offer flexibility in distributing income and capital gains, making them valuable for high-net-worth investors and those involved in intergenerational wealth planning, although they cannot distribute losses.

Equity loans must be used purposefully, as interest is only tax-deductible when funding income-producing assets, and proper documentation is critical for compliance.

Investors should weigh the differences between owner-occupied and investment properties when assessing equity, considering risk, tax deductibility and loan serviceability.

Managing multiple loans requires treating each investment as a separate entity to avoid financial confusion and costly errors.

While trusts offer significant tax and asset protection benefits, they may not be ideal for investors seeking immediate relief from negatively geared losses.