Hi everyone,
I am thinking of buying a property with my boyfriend as a tenant in common (70% him, 30% me). We are planning to rent out the extra rooms and I will live in one of the rooms (Boyfriend works in another state so will not be living with me). How will this work for tax purposes? I am aware that we can deduct the interest and expenses by apportioning it if I am living in it but with a co-ownership arrangement like this, does it mean that I can not deduct the full interest amount but my boyfriend can (based on his 70% ownership?) I am hoping to get the FHOG – I think it states that it is allowed as long as one of the co-ownership parties (in this case, me) lives in the property for at least 6 months. I would really appreciate your advice on this.
I think you will be able to claim a portion of the expenses for the part of the property rented out. if you rent out 50% then you should be able to claim 50% of everything. this would be shared in portions of ownership, so he could claim 70% and you 30% of any loss on this basis.
For the remaining 50%, you would be lviing there so couldn't claim. You boyfriend could claim a portion of this too if he was renting his half share to you. But it is starting to look complicated already!!
Are you aware of the CGT consequences?
If you rent out your home you will lose the CGT exemption for the percentage rented out. This could be far greater than any tax savings you get by claiming the loss from rent.
It may be better if you lived in the place for a while and then moved out and rented the whole thing out. This way you can claim it as your main residence and claim the CGT exemption which is available.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks very much for that, Terry
Just a further question – if I claim the place as my main residence and rent out some of the rooms (I will be living alone so don't need the other rooms), would the CGT exemption still be available? Is there a ruling that this is okay if the rental income covers the expenses etc and I would not be claiming for interest in my tax return?Hi
You can't claim the main residence CGT exemption while you are living there – so only the part you are lving in can be CGT exempt. The other part will attract GCT – I am not an accountant so please check.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Just a further question – if I claim the place as my main residence and rent out some of the rooms (I will be living alone so don't need the other rooms), would the CGT exemption still be available? Is there a ruling that this is okay if the rental income covers the expenses etc and I would not be claiming for interest in my tax return?You must be logged in to reply to this topic. If you don't have an account, you can register here.
