How to minimise tax - joint tenant wife is not working

[KT_Blues]

Hi,
We are now in the process of buying our second investment property. Its on the joint name as the first one, I am only working part time with the income less than 25K a year. How can we right off expenses for the negatively geared properties in such a way that it comes off my husband's tax?

 

[Terry_w]

Only the owner of the property can claim expenses. There are other strategies, spousal loans, name on title etc.

 

[KT_Blues]

So if it on our joint names can we claim expenses proportional to income. Say 10% from my taxes and 90% from my husband's taxes?

 

[Peter_Tersteeg]

Have you considered what your end position will be and how the properties can be best structured for tax purposes at that point. What about what will happen between now and then.

People usually focus on buying the negative geared properties in the name of the person with the highest income because that tax deductions are put to the best use. This is short term thinking.

What happens when the rent goes up? Eventually you'd expect a long term buy and hold property to become positive geared. At this point the property is best held by the person with the lower income because if tax is going to be paid, you might as well pay the least amount necessary.

Your end goal might be to retire and live off the rental income. At that point neither person would be working, so the income is probably best distributed 50/50, favoring neither person.

There's no solution that's perfect for all situations. Rather than looking at where you are now, consider where you want to end up and structure to that outcome.

 

[KT_Blues]

Many thanks Peter & Terry for your replies.

I browsed internet a bit after I've set up this post and it seems that setting up a trust is a way to go. What do you think about it? If I understand correct it allows to shift profit/losses between people when convenient.

 

[Terry_w]

So if it on our joint names can we claim expenses proportional to income. Say 10% from my taxes and 90% from my husband's taxes?

in proportion to ownership

 

[Terry_w]

Many thanks Peter & Terry for your replies.

I browsed internet a bit after I've set up this post and it seems that setting up a trust is a way to go. What do you think about it? If I understand correct it allows to shift profit/losses between people when convenient.

That is like saying I browsed the net and sweet potato is what to eat.
It may be good in some instances, but not for chips!

 

[Terry_w]

Many thanks Peter & Terry for your replies.

I browsed internet a bit after I've set up this post and it seems that setting up a trust is a way to go. What do you think about it? If I understand correct it allows to shift profit/losses between people when convenient.

No, losses cannot be distributed.