Does anyone know if I am able to rent from myself?
I was curious to know if I could somehow still own my house and rent as well.
Is it better to not have a mortgage on the house or can it still be beneficial regardless of whether there is a mortgage on the property or not?
T
You cannot rent from yourself just as you cannot marry yourself/borrow money from yourself/pay yourself.
But if you had a trust or a company owning the property then it would be possible.
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
Thanks Terryw
I was actually thinking of a trust so that has confirmed it for me now.
T
If you used a trust don't you lose the exemption on land tax?
What if you had some one rent the home from you and you sub-let a room from them?
cam7702 wrote:If you used a trust don't you lose the exemption on land tax?What if you had some one rent the home from you and you sub-let a room from them?
This would depend on the type of trust and the state the property is in. Fixed unit trust in NSW for instance – unit holders get the land tax free threshold.
Discretionary trust in QLD – large tax free thresholdTerryw | 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
I suppose any negative gearing benefit would be stuck in the trust, which would negate the benefit if the trust had no other income.
What about the subleasing? I cant find any arms length transaction requirements as in SMSF.
cam7702 wrote:I suppose any negative gearing benefit would be stuck in the trust, which would negate the benefit if the trust had no other income.What about the subleasing? I cant find any arms length transaction requirements as in SMSF.
Negative gearing is not a benefit! Its a loss.
If a discretionary trust owned a property and there was a loss the loss stays in the trust – just as it would if you bought a property and there was a loss. The difference is that you have other icnome to offset the loss. Trusts can have other income too, but if none then the loss carries forward.
Not sure what you mean about subleasing and arms length requirements – a SMSF couldn’t lease property it owns to a member or an associate, even at arms length, unless business real property. You couldn’t get around this with a sublease.
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
Sorry Terry, I shouldn't write posts in a rush!
I was talking about the original question Re. renting from yourself.
If someone was to rent their home out, to an unrelated party, then lease it from that party would this be OK. If you had the property on an interest only loan you could pay a higher rent and the unrelated party could make an income to make it a commercial arrangement.
I suppose if it were OK every one would be already doing it!!
Thenewme let us know how you got on !!
Dean
cam7702 wrote:Sorry Terry, I shouldn't write posts in a rush!I was talking about the original question Re. renting from yourself.
If someone was to rent their home out, to an unrelated party, then lease it from that party would this be OK. If you had the property on an interest only loan you could pay a higher rent and the unrelated party could make an income to make it a commercial arrangement.
I suppose if it were OK every one would be already doing it!!
Thenewme let us know how you got on !!
Dean
Sounds like some sort of scheme. Why would someone rent their property to A to only sublease it back?
If you are talking super then it would be prohibited under the SIS Act if residential. If commercial then a related party can rent it.
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
will you not have to also pay CGT once the property is sold as it will be classified as an investment property. would be better of keeping it as a PPOR that way you save on the tax?
Yep made-man, another thing to consider.
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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