Hello all,
I would like to know what are the ins and outs for renting the house your company owns for yourself to live in tempory from a legal or accounting perspective? Is it possible and what would be the down side?? Has anyone done this or knows someone who has.thanks
DarrenHi Darren
Are you referring to a Company where you are a Director or your Company being your employer ?
Richard Taylor | Australia's leading private lender
I know people that do it. Some professionals advise aginst it as it could be seen as tax avoidance there are afew ATO rulings aout this. If you were to do it make sure that the audit trail is as much removed as possible use a property manager have proper leases make sure the rent is market and even have someone you know sign the lease and you sub-lease off of them.
yes we are the directors of the company as the property is owned by the company with a family trust also. Also would it be true that we would have to pay market rent??
From a tax perspective the property is owned by the trust. If the trust is a unit trust, then the ATO doesn't really like it and has put out a ruling a few years ago warning against it. If it is a discretionary trust, then it may have more of a chance, but unless the trust has other income, there will be a loss (usually) and this will not be able to be offset against personal income. You could probably charge whatever rent you like, but as the arrangement is not at arms length, the ATO will likely want to assess you on the market rate.
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
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