Just had a thought that I havent had time to crunch but Im sure someone may have already pondered or tried it. If I bought a PPOR to live in with a defacto or friend would it work in my favour to pay the mortgage out of my pocket but through their bank account to be declared as rent for negative gearing purposes?
if you do, you will have to pay capital gains tax upon the sale (an equal percentage proportion to that rented, ie if you rented out 50% then you will be up for CGT on 50% of the profit).
For example
Total purchase price $300000
interest @ 8% interest only = $24K per annum
If you leased out 50% then 12K would be tax deductabile (plus 50% of all other costs like depreciation)BUT
if it was valued at $400000 at point of sale then your gain would be $100000, thus your gain as PPOR and therefore CGT exempt is only $50K, the other 50K is up for CGT. The actual amount of CGT would be dependant on your actual income and whether you held the property for more than 12months.
It would be worthwhile seeking your accountants advice as the short term benefits may come at the cost of a long term gain.
Hope that helpsCheers
TammyWhat you could do is live in the property initially, then your friend could rent it from you. You can then claim the expenses against your income, ie negative gear, and you may be able to keep it CGT free under s118-145 of the Income Tax Assessment Act.
Terryw
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