I’m new to this forum and was hoping I might be able to pick your brains on my situation. I have a -ve IP in Qld as a few years ago we bought my husbands parents house and we let them live in it for the first couple of years rent free but now for $100 a week. They, like most of our ageing population don’t have enough super to retire on and by buying their house it gave them some extra cash. The only +ve is the house increased in value and enabled us to use some of the equity to buy our own house. They pay all the rates and insurance etc. I’m now wondering if we are better to sell the house and just pay for them to rent somewhere. The house was recently bank valued for $340k and we owe $262k which costs $1324 in interest each month. Any ideas?
Sarah Melbourne
From a novice’s point of view, there seems to be 2 ways of approaching this – from the unemotional, investor ie sell; or 2nd from the angle of giving something to your in-laws. Have you asked what they want to do? Maybe they want to downsize? Maybe if you discuss your dilemma with them they can help you come up with a solution?
MarliOriginally posted by basher:I’m new to this forum and was hoping I might be able to pick your brains on my situation. I have a -ve IP in Qld as a few years ago we bought my husbands parents house and we let them live in it for the first couple of years rent free but now for $100 a week. They, like most of our ageing population don’t have enough super to retire on and by buying their house it gave them some extra cash. The only +ve is the house increased in value and enabled us to use some of the equity to buy our own house. They pay all the rates and insurance etc. I’m now wondering if we are better to sell the house and just pay for them to rent somewhere. The house was recently bank valued for $340k and we owe $262k which costs $1324 in interest each month. Any ideas?
Sarah Melbourne
[biggrin]
That’s funny. Subsidising your in-laws. Hope you relise that the taxman would be very interested why the rent is not at the market rate. If they catch up with you there will be fines, extra tax to pay. Don’t think it wont happen either.
Thanks for your concern but in our tax returns we offset our expenses with rent at the current market rate, not what they pay us. We are not trying to do anything dodgy, just help them enjoy their retirement. My husband and I are lucky that we both have well paid jobs. My query is more to do with whether we can still help them but at a lower cost to ourselves.
Sarah Melbourne
Torachan
You are assuming they are negatively gearing the property and that $100 is under makert value. Sarah, are you and is it? If so, …..becareful
I wouldn’t sell if it was me. Selling an asset that is performing well is only going to cost you money and you will miss out on all the future capital growth.
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 MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Sarah, sorry – I was typing while you were.
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 MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes the property is negatively geared and yes $100 is under the current market value. Why do I need to be careful, sorry if this sounds naive but we have discussed all this with our accountant who advised that as long as our tax returns reflect the current market rental value then what we are doing is ok? Surely there are others out there who help out family in similar ways?
Sarah Melbourne
Originally posted by basher:Yes the property is negatively geared and yes $100 is under the current market value. Why do I need to be careful, sorry if this sounds naive but we have discussed all this with our accountant who advised that as long as our tax returns reflect the current market rental value then what we are doing is ok? Surely there are others out there who help out family in similar ways?
Sarah Melbourne
That’s cool then. If the accountant assures you it is above board and it turns out not to be he/she wears it. Make sure you have it in writing somewhere.
I am very wary of dealing with family. It has a nasty nasty habit of turning very bad. Won’t go into horror stories but i’d be careful.
Torachan
(mate is in prosecutions in the tax office which makes him not very popular at parties but very interesting to listen to)Originally posted by marliw:From a novice’s point of view, there seems to be 2 ways of approaching this – from the unemotional, investor ie sell; or 2nd from the angle of giving something to your in-laws. Have you asked what they want to do? Maybe they want to downsize? Maybe if you discuss your dilemma with them they can help you come up with a solution?
MarliI think that is a great idea, maybe they are looking to downsize, and that would help you come up with a solution.
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