Hi all, Long time lurker first time poster.
My parents and I are looking to purchase a property for them to live in. More than likely the property will be negative geared due to the area they are looking at, but we all agree the area has growth potential so I am happy to wear the costs for now.
My parents will live in the house and pay rent at market rates and I will pay the gap between that and the interest loans.
Would I still receive the tax benefits as I would if we were to rent the house out to tennants? Or would things change due to my parents (half owners) renting the place?
We could also look at a trust set up, however for 1 property I'm not sure it would be worth it.
My wife and I currently have a IP and PPOR, but would like to help my parents out.
Any advice is appreciated.
You will have a hard time explaing to the ATO it's a IP …renting to your partents- and your partent's are on the title deed as well..so i would say NO. ( all title holder are entitled to the tax benefit from -ve)
But if you buy the property under your name only- and use your parents in a guarantor loan then this is possible- as they wont be on the title deed and hence your parents wont be entitled to any tax benefit anyway.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Trust fund is a totally different ball game! and depending on the trust you open ( hybrid, unit…) they normally have no "personal" tax advantages, the trust is it's only entity within it's own
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
So you are paying all the costs and your parents get half the capital gain???
That's very generous of you.
Unless getting finance is a problem you'd be better off buying something yourself and getting ALL the capital gain.
Thanks Michael, I assumed it would be a hard sell to the ATO. Also knew the trust would have no tax benefit for myself. I might need to go back to the drawing board and come up with another plan.
Catalyst, thats true. the reason I am doing this is because my father only has a few years to live so it is more to set my mother up for once he is gone. Also, they will be gifting me $80k to repay non essential debt and also to pay the majority of the upfront costs. so by me paying the difference between the "rent" and the repayments that is me actually catching up on my share of the loan.. if that makes sense.
That’s what any good son/daughter would do- Good job mate!
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Maybe its high time for tradam to give back to the parents. Great job.
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