I am after a little advice from some of you tax gurus out there. I purchased a 25% interest in my mothers home to enable her to pay out my father as a result of the court proceedings during a divorce.
I had to borrow the money, am i able to claim the interest on this property even though i dont recieve any income from it. Also would i be liable for CGT if the property was ever to be sold.
Thanks
Wayne
I think you could claim the interest. Your mum is really renting your share of the property, whether she is paying you or you are gifting it to her. But this also means you may be liable for CGT later on.
Terryw
Discover Home Loans
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Terry
I was not sure, because i thought that you had to charge market value rent? I will obviousley run it past the accountant, but it is always good to get external advice as well
Thanks anyway!
Oh, yes, you could claim the interest, but have to declare a rent from your mum. maybe you could give her a discount for keeping an eye on your share – legitimately.
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
if you don’t mind me asking Wayne, before purchasing the stake was the house paid off entirely or was there a current mortgage on the property?
Hi CJ
The house was paid outright, why do you ask?
Wayne
I’m in a similar situation however there is a current mortgage on my parents place.
In your case you’ve got a totally separate loan (making it a heapload easier to manage), however in mine I think I will have to re-extend the current loan with either my mom or my dad.
Cj
The bank forced us to put the loan in both our names and used the property as security.
Wayne
“What is the lap record, and which way do i go?”
ahhh. Figured as much but yeah, figured I’d ask anyway (it’s never safe to assume when you don’t know much lol)
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