Hello,
My husband has just taken a new job which includes rent to be paid as part of the package. We already own a house in the area ( a booming mining region) which has a massive shortage of rental properties.
Is it possible for his company to take a lease over the property and we live in it. Can we then declare the income as rental income.
The alternative is for us to rent out our house to strangers and try to find something else to rent but decent properties are few and far between.
Thanks
Natalieseverley doubt you would survive an ATO audit
I can't see why you can't lease your home to the mining company. Who they choose to allow to live in it (ie. yourselves) is their business and where you live is your business and no business of the ATO. So long as you declare your income from the lease honestly, you should be able to treat it as any other IP as far as I am aware.
I am currently selling my own property back to myself via a trust to maximise debt and tax advantages.
let me know if anyone knows differently to this.
soloinvestor wrote:I can't see why you can't lease your home to the mining company. Who they choose to allow to live in it (ie. yourselves) is their business and where you live is your business and no business of the ATO. So long as you declare your income from the lease honestly, you should be able to treat it as any other IP as far as I am aware.
I am currently selling my own property back to myself via a trust to maximise debt and tax advantages.
let me know if anyone knows differently to this.
any transaction that shows no real business purpose other than manipulating tax will draw ATO attention
on the other hand you have to draw the short straw and get audited……..just choose you own comfort level re risk/reward
Macnatt could we please have a private conversation regarding this and other matters if so please pm me it would be immensely appreciated.
All the very best!any transaction that shows no real business purpose other than manipulating tax will draw ATO attention
on the other hand you have to draw the short straw and get audited……..just choose you own comfort level re risk/reward
How is this transaction manipulating anything? They are not doing it to manipulate tax, they are merely taking advantage of an offer from their employer. This is nothing to do with a tax strategy, they are simply looking at a way to take advantage of their employer's offer to pay their rent as far as I can see. ??
I am entitled to lease my house out to anyone – even my employer if I so choose, and if they allow me to live in it then how is that relevant? This is no different to placing the house on the rental market and renting it out and living in another house while their employer pays their rent. Except in this instance it's even more logical due to the rental shortages in their area. ATO can investigate all they want and what can they do….they are doing nothing wrong.It is call extinguishment of a lease. A tenant, or sub-tenant who buys a property that they occupy effectively extinguishes the lease, likewise it cannot be done in reverse. You may have to 'move' the property into a trust, have the trust rent it to the company and inturn to yourselves.
soloinvestor wrote:any transaction that shows no real business purpose other than manipulating tax will draw ATO attention
on the other hand you have to draw the short straw and get audited……..just choose you own comfort level re risk/reward
How is this transaction manipulating anything? They are not doing it to manipulate tax, they are merely taking advantage of an offer from their employer. This is nothing to do with a tax strategy, they are simply looking at a way to take advantage of their employer's offer to pay their rent as far as I can see. ??
I am entitled to lease my house out to anyone – even my employer if I so choose, and if they allow me to live in it then how is that relevant? This is no different to placing the house on the rental market and renting it out and living in another house while their employer pays their rent. Except in this instance it's even more logical due to the rental shortages in their area. ATO can investigate all they want and what can they do….they are doing nothing wrong.as I said we all choose our own comfort levels…..probably just me being too conservative about a convoluted arrangement to live in my own house……I think tax is a factor depending on how the company treats that expense……..in any case I think they need the advice of a trusted accountant rather than an anonymous forum……. none of us will be around to support them if and when the questions start
Soloinvestor,
It's called 'Arms-Length' ruling!!! Placing it in a trust structure would be a good idea to consider for other reasons too … speak to a good property investment privi accountant.
Let's reason this through.
You have your own PPOR that you currently live in. You need to move away from your PPOR for work reasons. Provided that you have lived there long enough for the ATO to be satisfied that it is your PPOR (normally about 12 months) then you can move out of your PPOR and, provided you don't have another PPOR, you can rent out your PPOR and claim the deductions as per an investment property for 6 years.
Your husband has been offered a job where rent is part of the package. If the job was somewhere where you didn't have a rental property that would of course be no problem.
You have a rental property in an area where there is a massive short of rental properties. Half your luck! You can of course have any company you want or any individual you want renting out your property. No problem.
As long as the company enters a lease at market rates then I don't see any problem at all with what you propose. Don't get bogged down by the fact that you want to live in what is essentially your own rental property. If it was another employee from your husband's firm it would be fine. If you moved somewhere where you didn't have an IP it would of course be fine.
As a caution though, I would ensure that the lease to the company is at market rates and would get independent evidence to support this. I would also disclose this to the company and get some form of written acknowledgment from them.
I don't see any problem whatsoever with your scenario.
Cheers
K
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