Is it legal to move into property purchase under DFT?

[God_of_Money]

I have recently purchased a property under DFT.
My wife would like to move in for ~12 months.
What is the legal implicaton (i.e. is this legal)?
In terms of CGT, the property bought under DFT will subject to
CGT.

We have our own PPOR which is currently rented.

Need some advice.. Thank you

 

[Mry]

I have recently purchased a property under DFT.
My wife would like to move in for ~12 months.
What is the legal implicaton (i.e. is this legal)?
In terms of CGT, the property bought under DFT will subject to
CGT.
We have our own PPOR which is currently rented.
Need some advice.. Thank you

You really need to have an accountant that knows their stuff when you do things like this. The best I can do is give some general guidelines without knowing your particular scenario.

Yes, it is legal (as long as the deed allows it) but there are implications. You need to ensure the trust charges market rate rent. If you fail to do this, the tax office will treat the shortfall as a fringe benefit. The rent you pay to the trust will not be tax deductible if you use the house for private accommodation.

You will be able to claim expenses against that income. Losses are of course trapped in the trust, but any profits will need to be distributed. You can maintain your PPOR exemption on the old PPOR subject to the conditions of the Leave of Absence exemption.

There may be other factors which need to be reviewed so do see an accountant.

 

[God_of_Money]

Hi Mry

Thanks for the input.
Yes. We will pay the market rent.

The rent you pay to the trust will not be tax deductible --> If I rent out the property then I can claim the tax deduction... What is the difference between me paying the trust and rent it back at the market value?

Thank you