I and my parntner set up a company, we used a company name to buy an IP. I have a permenant job with stable income. Can the interest pay on the property be use to debuct on my personal income? or is that any other way to deduct my taxable income.
Hello BJBJ
All my investment properties are in my individual name. I did not see the benefit of setting up a company to buy IP. This is not to say it is wrong. Do you mind explaining why you put them in a company name so that I can educate myself?
As far as I know, you can only claim the tax back if it is in your individual name. It is offset against your income.
If it is in a business name, at the least it would have to be offset against the income from the business? if in fact it is a proper running business and not just a business you set up to buy IP.
Hopefully an accountant can clarify this for us!!
The company owns the property so it must claim the expenses, including interest. If the company has no other income, then it will have a loss which may have to be rolled over to future years.
You may need to divert income into the company to use these loses, but be careful with having the company run a business as this will put the property at risk if the business fails.
A company is not a good way to own a property for a number of reasons, the main one is that you will have to pay more CGT when selling.
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
Please tell me that you have bought the propety in a trust with the company as trustee,…
If not I feel you may have shot yourself in the foot.
My partner is a non australian. I am an australian. He is not allowed to own any IP under aus law.
That why we set up a company, I am holding a bigger share in the company.
Currently, I will like to know is there any ways where we can use the negative gear for our own taxable income.
Our only income for the company is rental.If there are no ways, what the best option we have at the moment?
At the moments, the option that i received, is to roll over all the expenses then at the end of 3 years when I sell the IP,
I can deduct from there. We only intend to hold the IP for 3 years.BJBJ
No unless the borrowing is in the Company name then only the borrowing entity can deduct the interest component.
Personally you will be unable to deduct anything.Holding the property in a Pty Ltd entity for a 3 year period with a view to then selling it is certainly not Tax effective as you will loose the Capital Gains Tax concession.
Not sure who gave you advice on how to purchase the property this way but i think i would be challenging their fee structure if they charged you anything.
Richard Taylor | Australia's leading private lender
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