Hi everyone,
Say for example you plan to live with your friends and they dont mind helping you build equity for future investments. Is it possible for you to have the title under your name, have the mortgage under your name, and have your friends live with you but they sign a lease and become your tenants. Are there any laws that prevent this and would you be able to use the fhog in this situation? I just thought I’d ask here before I speak to a solicitor about this.
Thanks,
RyanRYLU
Don’t know about the requirements to sign a lease, other than protecting yourself..
a friend of mine for years rented out 3 of his 4 bedroom house to friends for $100 p/wk each room, if they went away, $50 p/wk as storage and to keep room.
One year he finally mentioned this to his accountant who stated he should’ve declared it, as he could claim 3/4’s of all interest, bills etc..
however, it does affect you when you sell, due to CGT, though, why sell, move out to a new property and rent the old one out completely..
If your young and don’t mind living with others, why not..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Thanks Redwing,
Because you are living in the house and have tenants, would the banks see it as an owner-occupied or investment property?
Would you still be able to use the fhog even though it’s partially an investment property?
one would wonder if they were tenants, lodgers or borders
What’s the difference between the three? According to the dictionary, they’re all tenants. Anyways thanks for the replies.
How about a verbal agreement between you and your friends. And have them pay cash.
James
rylu
My brother did this. It is a good idea I think as long as you can be professional about the tenants. You can claim the %as a deduction on property expenses. The property would be subject to CGT on the proportion that is an investment property. If you had a three bed home and two tenants then 2/3’s is IP and 1/3 PPR. Another option is tenants in common- see the latest Aus Prop Investor Mag. They covered this very well. Essentially you and your friends each have a share of the property. And can dispose of it etc. The main catch is that yoy will be guarantor for their portion of the loan.
TC
Speak to your mortgage broker..
It’s your house..PPOR, don’t see why you can’t do with it what you want, as i said for my friend the benefits of claiming the tenants would’ve been better than doing it as a Ca$h only deal with his mates..
Weigh up all your options, speak with your accountant,mortgage broker or bank and go with the best course of action for YOU
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
I think the bank still sees it as owner occupier. You might be in trouble though if you need their rental to actually qualify for the loan, but I have heard of people providing a signed agreement to the bank, and they have taken that into consideration for servicability.
I think (note ‘think’ please check yourself) that if you don’t claim the interest portion, you may not be up for CGT on that part. Definitely discuss the options with your accountant, and work out whether or not you will declare and claim, or just pocket the cash. Also best check the legality or otherwise of ‘pocketing the cash'[
]Cheers
MelI guess my thougths are:
based on past centrelink interpretations eg borders might include food with their room of lodgingstenants on the other hand paying rent are treated differently
Then again I guess it depends on the terms of the agreement?
Of course if no one is involved with centrelink then there might not be a problem.
You might have problems with cash deals where there is no trail….when it comes to fights arguments and even the best friendships are strained.
I wouldnt expect a border to clean either, does that mean your tenants will share cleaning common areas?
maybe I am totally off track here everyone, but been down this path before and it can get ugly, even with agreements!
cheers
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