I posted this qu in 2 other forums, & didnt get the answer to the right qu, or got no response,so am re-asking. I really would appreciate an answer from someone in the know about wraps:
If i become a wrappee, then let out the premises (so that it then becomes an I.P.), am I able to claim expenses,depreciation & loan costs,etc?
An answer given was that I couldnt, assuming that it would become my PPOR.
Or is the wrapper able to claim them?? I dont see they should be able to,as it would be wrappee paying out all the expenses,rates,etc.Hi Misty
It is a little unusual for wrappers to allow their wrappees to rent out properties under an Installment Sales Contract but not impossible. I know a couple of wrappers that have and will consider it.
The following you should check with your accountant/tax advisor.
As you know, you don’t have to be the owner of an asset to try to make a profit from it. In this situation, you’re making a business decision which you believe will generate a profit for you in the future. It is also immediately generating business income. Therefore any losses generated by this business activity would be treated in the normal manner, i.e. they may be deductible against other income or accumulated over time.
I hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
thanks Paul. I gather by the lack of response to this post that it is unusual, & people jsut dont know the answer.So I think I’d best confirm with a wrap-specialist accountant before stepping in.
Hi Misty
Another point to consider in the situation you are purposing is land tax. In NSW a wrapper loses his/her obligation to pay land tax as soon as contracts are exchanged. As wrappees are normally owner occupiers, they too don’t have to pay land tax after exchange of contracts because it is their PPOR. However if you as the wrappee are planning to rent the property, then, in NSW this property would enter into your land tax obligations.
Hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Misty1,
My accountant who is experienced with wraps in WA states that a wrappee CAN rent out the property, but most contracts will not allow it without written permission of the wrapper (owner).
Carol
Also bear in mind that wraps in SA are a no no.
Cheers Richard
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Just think of it this way, the wrapper has pruchased the proeprty, it the eyes of the ATO, this is a sale as contracts have been exchanged. Therefore I would assume they could claim everyhting that a ‘normal’ owner could claim the wrappee could claim.
But I an not an accountant so this may be wrong.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks 4 all the comments. i contacted ATO. Bunch of ….. Told by 1 lady I had to send in for a private ruling! (Which seems to mean “I dont know,& cant be bothered to find someone that can help you”. The big “hand-ball”)
I told her last time they told me to write in for a private ruling,they took 30 days to respond,then asked for more bloody details-stating it may take up to another 30 days for an answer! I said there is no way I am waiting at least 30 days for an answer to such a simple question “so put me onto someone that can answer”. And, low & behold, I get transferred onto a lovely lady that tells me that,yes,it is recognised by the ATO as a legit deal, & therefore expenses are claimable.They claim that b/c there is an official “installment contract” in place,it is all honkey-dorey.
Just to let you know,I first tried asking my accountant (apparently with about 15yrs exp) if he’s ever dealt with wrap deals.Answer: “No, but if you ring my boss…..he will surely know”. So, I did. Mr X of R.J. Sanderson accountings’ (rather rude) response:
“It is not recognised by the ATO…I would not get involved in one of these deals…”
I was/am very annoyed when people (especially that claim to be specialists in a field) that have NO IDEA about something dog it.He then proceeded to try & get info about it from me!(rather hypocritical i thought)
Anyway,the motto of the story?
Keep askin’ till you get the right answer, & dont let ANYONE try & kill your dream.[biggrin]
After all….where there is a will, there is a way!
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