Hi guys,
I have topped up an existing home loan to the value of $41 000 back in June 2009. I did this with the intention of purchasing a new property. The new property settled on 15 July 2009. The new property is my PPOR and I am currently living there, however I have rented out 1 of the rooms on 20 July 2009 to a friend of mine on a short term 3 month lease.
1) Is the interest on the $41 000 tax deductible?
2) Would furniture, white goods (fridge, washing machine) and brown goods (TV, surround sound unit) also allowed to be depreciated as well since the property is now income generating?
3) If I get audited by the ATO, how would I prove that the new property has been rented out? Would the lease agreement be enough?
Thanks very much guys.if you do that, you could possably be hit with a CGT when you sell it, probably better not to tell anyone about the income ?
1) No – If you wanted to claim a percentage of the interest (for the one room being rented) you could, but I wouildn't recommend that, as it would make CGT payable on sale (the same percentage)
2) Again no, unless it is being used solely by the person renting the room
As I read it, you are renting out 1 room of your PPOR, to a friend. Are they paying market rent? These arrangements are usually not trated as rental income, but board being paid by a friend, and is not taxable.
As it isn't taxable, the deductions aren't deductible either.
and if you did claim it you may be saving a few hundred $$$ but loose thousands in CGT
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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