Hi all,
this is my first financial year declaring rent received on my company title residential unit. I am wondering whether I should treat the rent I receive and the interest on my mortgage that I can claim against the rent to be the same as if the unit was strata title (i.e. section 21 – Rent of the 2007/2008 individual tax return? I assume that this would probably be the case but am interested to learn about the experiences of others who have Company Title residential investment properties. I've had a look on the ATO website but can find no specific info there. Also my accountant has not had any previous experience with Company Title units so they are trying to find out what the situation is as well
any info would be greatly appreciated
thanks
Dom
Hi Dom
Interesting question.
I don't know the answer, but would think it would be the same as the income received is rental income. It is just the security that is different – shares in a company basically.
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
Have you got a lease with your tenant? If you have that would be end of story. Your company title gives you a right to occupy a certain part of the building. You are receiving money for giving someone the right to use your property. That is rent according to ordinary concepts. What you are getting is not a dividend, because a dividend is paid to a shareholder by a company. The difference with company title is that you are not going to be able to claim building write off because the building is owned by the company. So yes you declare the rent as income, and claim interest on any loan used by you to purchase the company title irrespective of what property the loan is secured against and claim any other ongoing expenditure you have had to make.
In any event Section 317 of the 1936 Income Tax Assessment Act seems to put this matter to rest. "lease" includes a sublease and, in relation to a company title interest in land, includes an agreement similar to a lease or sublease.
An agreement similar to a lease would be a licence.
How much is your accountant charging you? I hope not much when 10 minutes googling gives you an answer.thanks for the feedback guys, especially 'crj'. Yes I've got a typical lease with the tenant and I think the lease combined with Section 317 of the 1936 Income Tax Assessment Act pretty much seals it along wth the fact that I haven't found anything anywhere that indicates anything to the contrary. My accountant is not charging much and is from Queensland (not that there is anything wrong with that
) and as such has not had much to do with Company Title properties (much less common up there I guess unlike certain parts of Sydney and probably Melbourne).thanks again, much appreciated
Dom
As I said in jest at a party last night "You can always tell someone from Queensland but you can't tell them much"
We don't have much company title schemes up here because strata title schemes are far simpler! In other words, we Queenslanders are far more efficient and modern in the way we deal with things!
Same in NSW, company title is not popular at all and hard to get finance for. I have heard that one expensive block in the city was actually make company title so as to control who could buy in the building – other shareholders had to approve who you could sell your unit to.
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
eddie you will be suprised there is a fair number of Company Title blocks over in the New Farm area which i have had a lot to do with.
Richard Taylor | Australia's leading private lender
Terry, if it is the 'Astor' that you are thinking of, then it has always been very exclusive (it is on Macquarie St afterall). Prior to Strata Title becoming law in the 1960's or thereabouts, Company Title was the only means by which you could give unit holders title to a property. I believe that it is no longer possible to create company title properties (laws were repealed with the Strata Act) – it generally lessens the value of the property due to the difficulty in financing and selling.
Qlds007 wrote:eddie you will be suprised there is a fair number of Company Title blocks over in the New Farm area which i have had a lot to do with.Really? Are these new or really old blocks? I actually live in New Farm and have owned two units and both are stratas.
Mainly some of the older ones. I own a complete block in New Farm and the property next door is a Company Title.
Richard Taylor | Australia's leading private lender
Scott No Mates wrote:…. I believe that it is no longer possible to create company title properties (laws were repealed with the Strata Act)….I 'm not 100% sure but I think some Retirement Villages are still built and managed under a Company Title arrangement.
crj wrote:The difference with company title is that you are not going to be able to claim building write off because the building is owned by the company. So yes you declare the rent as income, and claim interest on any loan used by you to purchase the company title irrespective of what property the loan is secured against and claim any other ongoing expenditure you have had to make.Does this mean that you cannot claim depreciation for a property that is owned under company title?
any other nasty little surprises like this that one should be aware of?
) and as such has not had much to do with Company Title properties (much less common up there I guess unlike certain parts of Sydney and probably Melbourne).
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