All Topics / Help Needed! / Can you rent your own IP

Viewing 5 posts - 1 through 5 (of 5 total)
  • Profile photo of cjgs276cjgs276
    Join Date: 2002
    Post Count: 3

    Hi All, I plan to buy my parents beach house in Dromana for around 300k and live there on the weekends. But I need a place in Melbourne so as to make the commute to work more reasonable.  We currently rent in the SE suburbs.

    Am I able to;

    1) buy Dromana and have it as my primary residence (with maybe 50k debt)
    2) Buy a t'house as an IP in the SE suburbs (say400K)
    3) Rent the T'house to myself at a market rate (say 350/week)

    and still keep the taxman happy re the IP deductions etc.

    Any alternative structures happly considered,

    Thks yr advice.

    Profile photo of L.A AussieL.A Aussie
    Join Date: 2006
    Post Count: 1,488

    I am no accountant, and you will need to speak to one about this, but I'm fairly sure you cannot rent the t'house to yourself.
    If you have a company, you may be able to buy the t'house in your name and then rent it to your company, but as I said; talk to the accountant.

    Profile photo of DraconisVDraconisV
    Join Date: 2006
    Post Count: 319

    hmm, interesting scenario. You buy in your name. and then you own a company and you are the director, now the company needs somewhere to operate, oh and the company operates in your residence, so the director works at your own house. Hmm, does this sound right. Maybe your onto something, or its already been done and failed???

    Profile photo of MrmanMrman
    Join Date: 2004
    Post Count: 18

    I was thinking something very similar only a couple of days ago.

    I don't think you can rent the townhouse to yourself and even if you could it would probably be pointless as the interest on the IP is tax deductible but the rent you pay isn't so it would cancel out.

    I think the same would happen if you went with Marc's suggestion of renting to your company as the company can claim the rent as an expense. Then it goes to you as rental income where it is taxed and you use it to pay loan which is tax deductible.

    I guess if it is allowed it would depend on the tax rates as to whether it is worth it. I'm not an accountant so I am just saying what I think

    Profile photo of Tysonboss1Tysonboss1
    Join Date: 2007
    Post Count: 306

    This reminds me of a situtaion that myself and a couple of my army mates were going to try at one stage,

    When your in the army as long as you don't own any property within 50Kms of the base you are posted to you are able to claim rental assistance, when I was reading the fine print in the definitions part of the contract it stated the owning property within the 50km zone ment owning 51% or more of a property,
    because the rental assistance package was based on a percentage of the rent you were paying me and 2 mates were going to buy a property each owning 33.3% of it so we were below the 51% ownership mark, then rent it back to each other at a highly inflated rent so we could claim the max amount of rental assistance which worked out at somthing like $220 a fortnight each.

    how ever we never got around to organising it.

Viewing 5 posts - 1 through 5 (of 5 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.