Calling all Tax Experts,

My parents have recently emigrated to Australia and are living with me for the the past few months. They will be living with me for the short to medium term and have proposed to make regular payments to pay a share for boarding/utilities/expenses etc.

Am I able to turn this in to a legitimate tax minimization strategy by writing up a legally binding tenancy agreement with them where they pay me a certain amount per month as rent and that way I can claim a certain %age of my PPOR as an IP (say 30% as they occupy 1BR out of 3BR property) and legally deduct expenses?

Also, it is worth noting that my wife has provided "Assurance of Support" on their PR visa application for a period of 10 yrs. They are not deriving any income presently. However, they can provide evidence that their tenancy is being funded from funds in offshore accounts.

Also, what is the CGT implication for this scenario?

Appreciate your responses in Advance !!!
 
You could declare the income you earn from them and work out a percentage of expenses to deduct. Plenty of people renting out part of their property do this.
But it does mean there will be a CGT issue when you sell the place.
 
As I understand it, yes you can BUT:

- you need to declare the rental income
- the rent needs to be at "market rates" (have adverts of similar situations)
- the % of the home you declare as rented out will get hit with CGT

In the end, you may end up PAYING more tax.....

The Y-man
 
Thanks Depreciator and Y Man.

I intend to live here for the foreseeable future and don't have any plans to sell it.

Having said that, am I not able to stop the rental arrangement before I sell to gain the CGT benefits for PPOR when I eventually sell?
 
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