All Topics / Legal & Accounting / Ownership structure

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of frosty1frosty1
    Member
    @frosty1
    Join Date: 2007
    Post Count: 61
    January 25, 2009 - 12:36 am

    Hi,
    Could someone please comment.

    I want to buy an older property in my wifes name.

    The property will have a positive cash flow.

    My wife does not earn an income, so will pay no or little tax on property income.

    She can't claim anything against tax as she doesn't pay any, depreciation claims would be low anyway  (older type property)
     
    The property can be in her name, but the bank would require the loan to be a joint loan, as she is not working and earning an income.

    If my wife was paying some tax, could she off set the interest on the loan  or only half of it?

    The loan would be in my name and the wife's name.

    The purpose of the loan is soley for the property, so maybe it can be 100% claimed?

    Any comments or advice on this whole set up will be appreciated.

    Thanks,
    Frosty

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    January 25, 2009 - 2:07 am

    I think you cannot claim anything as you are not an owner of the property. Only your wife can claim.  Best to check with your accountant or download the rental properties booklet on the ato site.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of frosty1frosty1
    Member
    @frosty1
    Join Date: 2007
    Post Count: 61
    January 25, 2009 - 3:13 am

    Thanks Terryw,
    I would not expect to claim anything against my taxable income.
    But i was wondering if the wife could claim all the loan interest against her possible income, even though the bank loan is only half in her name as the other half is in my name.

    Property is 100% in wifes name.

    Bank loan for property  is in wifes & husbands name.

    Thanks,

    Frosty.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    January 25, 2009 - 3:17 am

    I think she could. You are essentially onlending your share of the loan to her to buy the property. But check with an accountant.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of ysm2ysm2
    Member
    @ysm2
    Join Date: 2009
    Post Count: 2
    January 25, 2009 - 5:02 am

    Hi Frosty

    I think the key is what’s the purpose of loan when borrowed. As you said it’s to finance your wife’s house so she can claim 100%.

    If you want to make more logical for tax department that also will not effect in income tax either to you or  your wife.
    Your wife can claim 100%interest, pays 50% interest to you and 50% to bank. In your income tax return you can declare income of interest you get from your wife and expenses of interest you pays to bank.

    But still check with your accountant.

    Yugraj
    New Zealand

    Profile photo of eddieceddiec
    Member
    @eddiec
    Join Date: 2004
    Post Count: 113
    January 28, 2009 - 2:04 am

    I agree.  You will be taken as if you have on-lent your half of the loan proceeds to your wife to enable her to buy the property.  In your tax return, you need to show an interest income and interest deduction of the same amount (being the interest charged by the bank on your half of the loan).  Your wife will then claim the interest on the entire joint loan.

    Eddie
    [email protected]

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