renting your own property

Viewing 8 posts - 1 through 8 (of 8 total)

anitah
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@anitah
Join Date: 2006
Post Count: 2
December 29, 2006 - 2:52 pm
Hi, I thought I’d ask a dumb question… if I sell my own home to release equity to buy investment properties and rent a home to live in… can I rent a home from my own trust or similar?
Thanks for your help!
Anita [hmmm]
condog
Participant
@condog
Join Date: 2006
Post Count: 56
December 29, 2006 - 9:35 pm
No. Not legally.
L.A Aussie
Member
@l.a-aussie
Join Date: 2006
Post Count: 1,488
December 29, 2006 - 10:07 pm
Here’s a better idea;
Keep your existing home and access the available equity for more I.P’s. Sure, you can’t access ALL the equity, but if you sell you will incure selling costs, and lose any future cap growth on the property. The advantages of not selling will out-weigh the advantages of selling.
Then move out of your existing home, rent somewhere else as you have planned and turn your existing home into an I.P as well.
Very few people have the courage to move out of their own home for future financial gain as they are too emotionally attached to it.
Cheers,
Marc.
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tammy
Member
@tammy
Join Date: 2005
Post Count: 155
December 30, 2006 - 4:04 am
Hmmm…. It was my understanding that you were able to rent from your trust as long as you could prove that it was at current market rent. The obvious downside being the loss of the CGT exemption, but I guess you do get the tax deductions. Would someone with more experience care to reply?
T
bridgebuff
Participant
@bridgebuff
Join Date: 2006
Post Count: 189
December 30, 2006 - 4:16 am
There are certainly ways around it. Eg I believe that if you own the trust but your wife (if you have one) rents the house, you are legally not renting and can treat it as an IP.
But I will certainly pay to check with your accountant.
anitah
Participant
@anitah
Join Date: 2006
Post Count: 2
December 30, 2006 - 5:11 am
Thanks everyone, food for thought then. There may be a way and I’ll need professional advice. I know what you mean Marc about not being able to part with family home but we have just finished the most divine reno and are up to our ears in debt… we know we can sell it for a good price because of location.
We decided while on long service leave this year that “home is where we are as a family”, not the family home and we can downgrade our living standards for long term gain. The kids (aged 10 and 12) are even on board!
We are thinking of maybe still buying but shifting “bracket” from the 600K+ down to the 350k range. We are in a regional centre, so still achievable. The other option is to sell and rent, releasing all the equity and get rid of personal debt.
Any further thoughts from you all would be gratefully received.
Anita.
Xenia
Member
@xenia
Join Date: 2002
Post Count: 1,231
December 30, 2006 - 9:11 am
Originally posted by condog:
No. Not legally.
Why Not?
That’s the way we are set up at the moment, all accountants say it IS legal, are you talking about something state specific?
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Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
December 30, 2006 - 9:48 am
Originally posted by condog:
No. Not legally.
I disagree.
Terryw
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