Hi everyone!
I'm a new member here and am currently living in Sydney. Hopefully someone might be able to provide answers to my silly questions regarding investment properties (IP). Who actually clarifies that occupancy period of an IP, and how is it done? An owner could be renting out for a full 12 months/365 days, but claims to be rented for half the duration. If it is managed by real estates, they would have the actual details like total payments received, rental duration, the person renting, etc. Do they submit to the ATO or certain government department?
Can I rent an IP to my wife? I'm aware that I'm not allowed to live in that property, but who enforces that and makes sure I'm not? How would they find out or know?
I don't seem to find all these information clearly on a website, except for the benefits of IP which are available almost everywhere.
That's all for now, more questions to come later. Thanks!
Cheers,
Shawnshawnnny wrote:…Who actually clarifies that occupancy period of an IP, and how is it done? An owner could be renting out for a full 12 months/365 days, but claims to be rented for half the duration. If it is managed by real estates, they would have the actual details like total payments received, rental duration, the person renting, etc. Do they submit to the ATO or certain government department?a) You are obliged to have a documented lease and have any bond lodged with the rental bond board (so the State Govt knows that you are renting out the property). This has implications for the OSR with regards to Land Tax.
b) Real estate agencies provide you with a monthly statement of income/expenditure, what you do with it is your concern. REAs also submit their Activity Statements to the ATO, if they get audited, then all of their transactions are visible, REAs also lodge all of their bonds.shawnnny wrote:Can I rent an IP to my wife? I'm aware that I'm not allowed to live in that property, but who enforces that and makes sure I'm not? How would they find out or know?
Nothing stopping you from leasing your property to your wife however scratch the surface and you come unstuck: "have you separated?", if so, is the property leased at market rent? Why/Why not?; Do you have a lease in place? Why/Why Not?; If your home is no longer your wife's PPOR, she may be liable for land tax on her portion of the property and the list goes on.
You are the one who signs your tax return and the onus is on you to declare things properly.
I am sure there are individuals out there who do not fully disclose matters in their tax returns. Doing this puts you at risk of gettign offside with the ATO.
In my humble opinion – not worth waving a red flag under the ATOs nose as there is more to be lost than gained by cribbing numbers and figures.
Obviously there are ways to declare things inaccurately to the government in order to lower your tax, but that is called tax evasion and it is illegal. You should talk to your account about some LEGAL ways you can lower the tax you have to pay on your investment property.
For example, you can often claim depreciation on the house and the items inside the home (Eg. Light fittings etc.). If you do repairs on the home then you may be able to claim some of that against your taxable income. There are lots of ways you can go about lowering your tax. Speak to a qualified accountant about how to do this (as I am not an accountant don't take anything I or anyone else on this forum says as "law").
I have heard that you can rent your house to yourself if you have purchased the property through a discretionary trust, and you rent it to yourself at market rent through a real estate agent. This means however that you will have to pay the real estate agents commission fee. But again this is something to talk through with your accountant.
Hope that helps. But really in my experience, cutting corners and doing the dodgy will only get you in trouble and set you back in life. Better to pay tax than to avoid it and end up in jail.
Ryan McLean | On Property
http://onproperty.com.au
Email Meryan mclean wrote:Better to pay tax than to avoid it and end up in jail.Well ……..
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