PPOR as 50% Investment

[daz69]

Hi,
If I owned 50% of my PPOR with my sister and purchased the other 50% from her, but she continued to live there and pay rent. Can the 2nd loan to buy her out be classed as an investment loan and subsequently part of the house be an IP?

Has anyone heard of something similar????

Thanks

[Glebe]

I haven't heard of this exactly, but it sounds fine to me.

Of course, the rent will need to be declared, and when you sell, a percentage of the capital gain won't be exempt from capital gains tax.

Might be better if she simply pays for the grocery bills.

Happy to hear the opinions of others.

[Mry]

Questions-

1) Do you currently have a loan against your half of the property?
2) When the house was split 50/50, did you just "share" the house as joint owners or did you buy specific portions of the house and property?
3) Will part of the house be specifically for her use, with its own kitchen, bathroom, bedroom and living area, or will she just have a bedroom and share the rest of the house with you jointly? For example, will you be sharing a fridge and buying your own food or jointly sharing the lot?
4) Is the house one that will grow substantially in value in the future?
5) Do you require a fair bit of money to pay off the loan, or are you able to do it specifically from your own sources of income with no outside funds, such as rent from your sister?