Has anyone had the situation of a relative living in your investment property and paying less than market rent (say your mother) and the tax department telling you “tough – declare the market rate of rent”?
My accountant told me to declare what I am actually getting paid and reduce my expensed claim accordingly – this is not much good to me, because I am then not getting the full claim for my expenses (ie being short changed at the other end of the equation). One ATO agent told me to put in an applicaiton for a private ruling…
Am I missing something basic here (apart from: yes, it’s not a very good “investment” with the outlaws in there!)?
JamesThe old situation of helping your relatives to the detriment of yourself. You might have to bite the bullet and get normal market rent paying tennants in, after all it’s your investment, money, future etc. I just hope they’re not taking advantage of your kindness in you helping them with somewhere to live.
You also might like to start talking with other accountants too. If your current one cant help you to maximise your investments it might be a good idea to start looking elsewhere.
Hope this helps…G7
Its called oportunity cost. Your cost for being a good child to a non paying mother, is a crap tax return.
The tax man will not care who it rents to or what rent they are paying. All he wants is as much of your money he can legally steal. So either up the rent for mum or wear the tax cost. Either way you loose.
Got a plan for you, put your mum in someone elses under market rented unit, rent yours out for full rent, get your tax deduction and extra rent as well then with your better financial situation then kick a few $$ back towards your mothers rent elsewhere.
Works for me.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Or there is the ‘ILLEGAL’ alternative….
Charge them full rent and then kick-back the ‘CASH’ difference each week.
I personally would not charge family anything if I could afford it.
TMA
http://www.email4money.info
Investor Links
First Home Buyer WebsiteIt’s your property mate and you can charge what you like, at the end of the day you are the one loosing because of cash flow short fall.
If i had a book valued at $100.00 i can sell it for whatever i like – if i lose money i am the stupid one not the ATO or my accountant.
I own a commersial property that i rent to my nephew at 75% market rate – its my loss and his fortune to help his business.
The problem comes if you have to sell and prove income to sudstantiate value.
resiwealth
No JimboJames…I’ve never had that situation.
Yes JimboJames, you are missing something.
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