Difficult question in response to claiming rental expenses

[Tano]

A friend at work has fully purchased an IP and pays all the outgoings and recieves all the rent into her bank account but needed some equity from her ex partner so they are TIC 50/50. (in response she gave him the house they lived in before they split hence why he agreed to the 50/50 split)

Can the ex-parter claim 50% of the loss (negative gearing) on his tax return if the lease does not mention his name and he has no proof of any money recieved or expenses paid? If not, can she claim 100% anyway and not be fined even if he is planning to claim 50% by guessing these expenses?

 

[Paul@PFI]

Wow...That's confusing....

How can something fully purchased be 50/50 ??. There may some CGT issues associated with gifting a former property etc if its not done correctly.

There are some issues here requiring personal advice
- A person not entitled to receive income can still receive it and it is still taxable. If ex is named on title then yes he most likely is receiving a 50% share of neg gearing. Your friend cant claim 100% and multiply her deductions just as she pays it.
- A person not on title cannot claim anything.
- Tax law doesn't care who pays...If one owner pays its considered a joint expense

Worth checking as ATO easily detects anomalies after a time. They usually consider penalties, interest and adjusting returns and this is best avoided. Likely simple to review and give specific advice.

 

[Tano]

Thanks paul, yes its complicated. His name is on the loan and title but does not pay any mortgage. She will need to see an accountant.

Thanks.

 

[Paul@PFI]

OK that's easier to understand...He includes 50% of the income and expenses in his tax also. He may have a right to demand his share of income too. Or demand sale !!

A lawyer may be a better option.