All Topics / Hotch Potch / Income & tax ramifications

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  • Profile photo of TruskaTruska
    Member
    @truska
    Join Date: 2003
    Post Count: 20

    Hi all

    I’m about to buy a cash flow +ive IP with my sister & her husband. She earns only a small income, he earns well into the top tax margin.

    We are hoping to put the IP in all three names (half mine) as their share of the income would be split so that my sister’s income is taxed less.

    If they borrow all of their half but only put the loan in his name, (which should make it revenue neutral for him or only a slight loss), will the Tax Man let him claim all of the interest on the loan. I ask this because the loan would be used to buy my sisters share as well, but he would only be receiving a 1/4 of the total income.

    Any thoughts on this…

    PS I hope I’ve explained this clearly enough[:I]

    Thanks

    T

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I htink you can only claim in proportion to your share of ownership. But you may be able to set up a partnership and claim differently further information can be found in the ATO rental properties booklet, which you can get as a PDF file on http://www.ato.gov.au somewhere.

    Have you considered using a discretionary trust or a hybrid unit trust for this? Witha Hybrid all the interest could possibly attributed to the highest earner. More info is in Dale Gatherum Goss’s “Trust Magic” book.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of bribiebribie
    Participant
    @bribie
    Join Date: 2003
    Post Count: 67

    Terry,

    I haven’t heard or seen of this Trust Magic book. Do you know where it is available?

    bribie

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