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My sister and I have inherited the old family home and I am considering buying out her half share. I have a son who has health issues and is only able to do some part-time work. So if I acquire the family property, it would be my intention that my son would live there and would pay a nominal weekly rent to go towards rates, water and sewerage, insurance, repairs, etc. Perhaps he could pay $100 per week whereas the market value rent would be more like $400 per week.
I have spoken to an accountant about the tax implications of such an arrangement but this topic appeared to be outside his area of expertise. On the ATO website, I could only find one direct reference to this subject (IT 2167) and, in my words, income tax deductions for losses and outgoings would be allowed up to the amount of rent received for the financial year. Now this tax ruling was made almost 20 years ago (1985). Therefore I would appreciate advice on whether any tax rulings or legislation have superseded IT 2167 and whether there are other pitfalls and issues that I need to be aware of before making a decision.
Many thanks
Glenn A
Brisbane
Possibly zero deductions and zero income if it looks entirely motivated my domestic reasons.
I take your son is likely to be on a disability pension. There could be an opportunity for govt accommodation subsidies. You could also look at a share flat situation and rent the other bedrooms to people in similar situations. The property may require some upgrades to meet regulations (fire alarms etc)
You might also be able to move the house into a trust of some sort. A few of the lads here are expert in this sort of stuff but I think restructuring and a shared accommodation setup could solve most of your problems and leave you with a bit left over after expenses.
