Hello Property Investors,
My Wife and I have been requested to move to NSW for work.
We both work for the same company, and LAFHA will be paid to ONE of us when we move.
It is intended that LAFHA will cover the cost of renting a property in NSW.Our current PPoR (in SA) is wholly in my name, and I do not intend to rent it out while we are interstate (too much hassle shifting/storing furniture etc).
I am looking to maximise my tax deductions.My question is:
Can I purchase an investment property in NSW, and rent it to my wife?Of course, it would have to be rented at a 'reasonable market rate'.
The negative gearing on this property would help reduce my taxable income.
The LAFHA paid to my wife would cover her rental costs to me.Effectively, I would still be 'living' in my PPoR, but just 'staying' with my wife in the rental property.
I have asked a few people (non experts) and they think it sounds dodgey.
However I believe that as long as I keep my original PPoR, then I am entitled to have an investment property interstate, regardless of who is renting it.Thoughts and comments appreciated.
Cheers, Hugh.
Firstly, there is no issue renting a property to your spouse. Malcolm Turnbull rents his wife's appartment in Canberra.
The problem I see is that you will be living in the property that you are saying is being rented to your spouse. You can't rent to yourself, and as this will be your home as well, this may cause an issue.
Is the move to NSW a temporary move? I'm guessing from your post that it is. If it is, what would you do with the NSW property after you move back to SA? And how long do you expect to be away from home. Also, do you own your PPOR, or are you still paying a mortgage?
What I'm getting at is that it may be simpler to rent a property in NSW, covered by the LAFHA, and buy an IP closer to home.
Dan42 wrote:Firstly, there is no issue renting a property to your spouse. Malcolm Turnbull rents his wife's appartment in Canberra.The problem I see is that you will be living in the property that you are saying is being rented to your spouse. You can't rent to yourself, and as this will be your home as well, this may cause an issue.
Is the move to NSW a temporary move? I'm guessing from your post that it is. If it is, what would you do with the NSW property after you move back to SA? And how long do you expect to be away from home. Also, do you own your PPOR, or are you still paying a mortgage?
What I'm getting at is that it may be simpler to rent a property in NSW, covered by the LAFHA, and buy an IP closer to home.
Thanks Dan42,
Well, I guess it will depend on one's interpretation of which property I am 'living' in.
I would hope to try and argue that I am 'living' in my PPoR, since all my mail will still go there, and there will certainly be no other people (tenants) living there. Where I 'sleep at night' might be a different story…
I'm still paying the mortgage on the PPoR.
The interstate move is for about 18 months. After this period, I would return home to my PPoR, and rent out the property in NSW.From a tax perspective, it looks ok. You would be able to claim interest and other expenses on a property rented to your wife, IF your wife is paying market rent.
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