What about the rental income you are earning?

You add up all the costs and then deduct this from the rent. If there is a loss this means you are negatively geared. If positive you are postively geared.

Interest Paid $16000

You have to consider what the security would be for the loan. If the trustee is going to offer you a 1st mortgage then no reason why you would not offer similar rates to a bank. If it is an unsecured loan then a commercial rate may be a higher rate. But you would not want it too high as you are diverting income from the trust to yourself. You…[Read more]

Aren’t you going to seek legal advice before signing? Christmas is coming up and many firms will be closed from Christmas to 20th or so Jan.

1. Yes, if you borrowed to buy.
2. no
3. yes. You would have to lend the trustee the money. loan would need to be at a commercial rate if you want to claim the interest.
4. not enough info, but can be a good way to proceed. But there may be better methods.

A company is a legal person. It can enter contracts and it can sign by having its directors sign. A trust is not a legal person. It cannot sign a contract because a legal person needs to sign a contract.

It is like a person with a power of attorney. The person holding the power enters the contract. Same with trusts. The person holding the power…[Read more]

A trust is a relationship. it doesn’t exist as a person. A trust is where A owns property for B obligations attached. A trust cannot enter contracts of be sued. It is the trustee that enters contracts and the trustee that is sued.

Whether the trustee discloses on contracts that it is acting in its capacity as trustee is up to the trustee. It need…[Read more]

You will pay all 3 but the seller will reimburse you for the discharge of their mortgage.

Solicitor rules mean it must be locked up in a safe. You would also be covered by the solicitor’s insurance.
So it would be pretty safe.

The client is at fault and will wear any penalties. but they may be able to sue the accountant for negligence and breach of contract.

Speak to your tax advisor about your situation and see if there is something you can contract with your wife to do so you receive income and she is able to claim it.

Yes any loss (negative income) can be carried forward till the next year, and then carried forward again until your income is positive.

What can you do? Not much without changing ownership. Your wife could borrow to buy your share of the property. she could borrow to do so and claim the interest. It would be a CGT event and a stamp duty event,…[Read more]

Rather than purchasing a rental property why not consider a purchase an owner occupied property and then borrow to invest.

Buyers agent fees are not deductible, neither are building inspection costs. Both are capital expenses.

don’t forget stamp duty and you will be taxed as income with no 50% CGT discount even if held more than 12 months since exchange.

You also need to be able to settle in case you cannot find a buyer.

It happens heaps, but often the other way around. Accountants may tell a client they can claim something when they cannot. This is very common with interest. Probably half clients that come to see me are probably claiming more than they are entitled to, while the other half is claiming less.

Or to put it another way, Bruno’s accountant almost cost him $56,000 on top of his other fees.

If you rented it out for 3 months and it was then your main residence, including any absence where you are still claiming it as the main reisdence then you can use the formula at s118-185 ITAA97

http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.185.html

CG x non main residence days/ days owned

(i had the wrong section above -…[Read more]