Hi Guys,
Can investors out there assist me please.
I have the following situation in buying an investment property.
Person A and Person B are getting a loan in joint name however the property title will only be in Person A name.1) Does person B have to declare half rental as income when tax time come?
2) If question 1 is no, what happen to interest charged on the loan? Will it counted as half only because it's joint name?Thanks advance for your help.
Regards,
SFK
Not an expert but my understanding when I recently asked our accountant the same question is that loan in both names helps you get the loan (rather than one acting as guarantor for the other). But interest is only deductible to the person in whose name the IP is bought. Rent also goes all to the owner.
So you example person A gets all the rent and all the interest deduction. Person B just helps get the loan in the first place (eg ifthey are the one with the big income)
I think only benefit doing it your way is you avoid paying the guarantor fee ($300 or so) to the bank.
Agree…
Not such a free lunchSo you guys are saying that Person A will be able to claim all the interest paid on the IP or is it only half?
My understanding is that the ATO looks at the purpose of the loan. In this case it was to buy a IP for person A. Therefore person A can deduct all the interest on the loan and person B can deduct none.
PS I am not an expert, just have asked the same Q of my own accountant lately.
The Title owner is the one deemed to be the owner of the property and is who can claim the interest deduction.
Richard Taylor | Australia's leading private lender
Thank you for the advise everyone.
Seeing that you are a broker Richard, what you are saying is that Title owner can claim for all interest paid even thought the loan was under joint name with another person who is not on the title.
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