Tax deductability of loan from relative

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

thinker
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@thinker
Join Date: 2005
Post Count: 29
March 7, 2005 - 1:05 pm
(another question – apologies for the spam)
I recently bought an second IP with the deposit funded from a) Equity realised from 1st IP and b) loan from parents with market rate interest…
Now: I understand a) is deductable as the purpose is clear but what documentation do I need to claim b) as a deductible loan?
… Seeing my accountant shortly but just preparing…
foundation
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@foundation
Join Date: 2005
Post Count: 1,153
March 7, 2005 - 2:23 pm
1) The accountant will be best able to advise you.
2) Carry a tissue or two.
thinker
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@thinker
Join Date: 2005
Post Count: 29
March 7, 2005 - 2:43 pm
It is directly backed to backed with a loan to my parents (in their name) from the bank if that makes a difference.
foundation
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@foundation
Join Date: 2005
Post Count: 1,153
March 7, 2005 - 10:32 pm
Are they declaring the interest you pay them as income for the purpose of income tax collection?
I can’t believe you’ve left it until now to look into what are crucial issues!
thinker
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@thinker
Join Date: 2005
Post Count: 29
March 7, 2005 - 10:50 pm
Originally posted by foundation:
Are they declaring the interest you pay them as income for the purpose of income tax collection?
I can’t believe you’ve left it until now to look into what are crucial issues!
It is a relatively small amount and yes, they are declaring the income.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
March 8, 2005 - 2:04 am
Yes you can claim the interest. You probably should have a written loan agreement in case of audit.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
leo777
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@leo777
Join Date: 2005
Post Count: 23
March 9, 2005 - 12:36 am
Regarding to the loan agreement, what kind of information should we provide ?? And who’s going to certify it ??
One more thing, how about the rental agreement, with his her relative ?? What sort of document that we need to declare to the tax officer for audit purposes ? And who’s going to certify it ??
Thank’s
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
March 9, 2005 - 5:19 am
Just ask you accountant to draw up a loan agreement.
For the lease, you just need to purchase one for about $25 and get them to sign it. You might like to get a letter from an agent confirming market rent – this will prove you are not under charging relatives.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au