What would be the motivation? To increase your negative gearing loss?Thanks for the reply Propertyunity. Is it acceptable that I charge slightly below market rent? Say, 10-15% less?
There is nothing wrong with that. There are often free rent periods or rent reduced periods negotiated with tenants that are disrupted by a LLs renovations.I would look to reduce the rent during renovation
That's fine but self managing and then passing the 'savings' onto the tenant is most probably not acceptable as being seen as charging market rent.and also may decide to self manage - if renting to a trusted friend - this would therefore save me property management costs.
Given the 1 factor of disruption to the tenant you could conceivably do this for the period of the renovation only AND then possibly followed by an increase in the rent charged, to account for the added value arising from the renovation.Given these 2 factors, I may rent the property out at 20-25% below market (for a period of time).
Who's to say: generally a 'reasonable' person. Would a resonable person accept a tenancy period of reduced rent for the period of the reno at a 25% discount - probably. Would a resonable person as a tenant expect to pay less because they are renting privately - perhaps?? Would a tenant then expect to be charged a higher rent, after the lease expired, due to property improvements - yes.Who's to say what a reasonable "market" rent is for this set of circumstances?
If I was to rent a property out at lets say 10% under market rent on an ongoing basis, how do I account for that at tax return time? What proof do I provide?
As grizzly said 10% is too subjective to worry too much about. At 25% I think they could make a case against you.