Using your PPOR as your IP

Viewing 4 posts - 1 through 4 (of 4 total)

sundipb
Participant
@sundipb
Join Date: 2009
Post Count: 13
November 11, 2009 - 5:09 am
G'day
I was wondering if i could use my PPOR as my IP. I got a FHOG for 21k and have been in my property for 6 months now.
I want to give it out for Rent and also stay in the same property. I have got 3 bedrooms and will give out 2 bedrooms for rent.
I was wondering if i could do that and get it -ve geared so i can get back some TAX money back.
Any ideas on how to do this please, maybe setup myself a dummy postal address or so??
thanks
duckster
Participant
@duckster
Join Date: 2004
Post Count: 1,674
November 13, 2009 - 12:26 am
You do not need a dummy postal address as you can proportion your house
so that part of your house is PPOR and Part of your House is IP.
So your expenses incurred to earn the income are also proportioned in the same ratio.
However you will lose a proportion of your house from exemption of capital gains tax.
see
http://www.ato.gov.au/download.asp?file=/content/downloads/IND00191817n17290609.pdf
See example 6 page 7 in document or page 11 of 44 in PDF.
Renting out part of a residential property example 6
claiming 100% of expenses would be most likely seen by the ATO as fraud or tax evasion via a dummy address when 100% of your house is not being used for investment
jail or a fine or both could be the result if audited by the ATO. Is it worth being honest or risking your freedom?
Also rent has to be at a market price and renters have to be at arms length also in PDF if you search it.
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
November 13, 2009 - 11:38 am
If you rent out part of your home that part will no longer be CGT exempt. Saving a few hundred in tax could cost you thousands later on.
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
duckster
Participant
@duckster
Join Date: 2004
Post Count: 1,674
November 13, 2009 - 10:34 pm
Some previous postings on this situation
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4329617?highlight=boarder
https://www.propertyinvesting.com/forums/property-investing/general-property/4329344?highlight=boarder
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4328447?highlight=boarder
https://www.propertyinvesting.com/forums/property-investing/help-needed/4327840?highlight=boarder
https://www.propertyinvesting.com/forums/property-investing/general-property/4323598?highlight=boarder