No because deductability is based on the purpose of the funds. So would depend are what you used the loan to purchase.
I would recommend speaking with an accountant to confirm.
Pre-Paying interest ? Your portion only
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No because deductability is based on the purpose of the funds. So would depend are what you used the loan to purchase.
I would recommend speaking with an accountant to confirm.
Joint ownership is a tax law partnership where deductions are normally apportioned by legal interest regardless of who borrowed and in what percentages.
This can have unintended consequences !
I would recommend speaking to a tax accountant.
He's not questioning the apportion, he's said its 50/50. Product was referring to was to split the loan into individual names. Therefor debt in the one name. But again would speak to a tax account if this would give you the benefit you're looking for.
Rob mentioned apportioning regardless of who borrows - it is probably the names on titles that count.
Wouldn't it depend on the type of interest in the property (tenants in common or joint tenants)?
If tenants in common it should be easy to seperate the loans and have prepay from both tax and banking perspective. This would be the case if you say bought a property with a cashed up friend, they could pay their share in cash and you have a loan for your share.
I highly doubt it would be possible if joint tenants.
If tenants in common it should be easy to seperate the loans and have prepay from both tax and banking perspective. This would be the case if you say bought a property with a cashed up friend, they could pay their share in cash and you have a loan for your share.
I highly doubt it would be possible if joint tenants.
Tenants in common is still joint income.
The original post also stated joint debtors, that falls completely into the ATO's simplistic approach.
The article referred to in the later post suggested associates borrowing on separate sub-accounts while guaranteeing the others ... not much difference in substance.
Also, nowadays with the obsession for leverage, joint debtors as opposed to guarantors is pushed by loan brokers.
Many syndicated investors don't do their research.
The original post also stated joint debtors, that falls completely into the ATO's simplistic approach.
The article referred to in the later post suggested associates borrowing on separate sub-accounts while guaranteeing the others ... not much difference in substance.
Also, nowadays with the obsession for leverage, joint debtors as opposed to guarantors is pushed by loan brokers.
Many syndicated investors don't do their research.
I still haven't found a way to reduce my taxable income for this year only.
So far this is what I think I can do.
1. Stop working where I'm now (instead of end of June) and get a contract job (under our existing business) . This way I can shift my personal income to business.
2. Buy shares in my name only and pre-pay the interest. - A bit too risky
3. Buy a cheaper IP on my name only and pre-pay the interest. - Don't really want to commit too much before settling into a job.
So far this is what I think I can do.
1. Stop working where I'm now (instead of end of June) and get a contract job (under our existing business) . This way I can shift my personal income to business.
2. Buy shares in my name only and pre-pay the interest. - A bit too risky
3. Buy a cheaper IP on my name only and pre-pay the interest. - Don't really want to commit too much before settling into a job.
Can you prepay your investment property expenses? Eg rates, water etc?
Everything is 50:50 and also wife is part-time this financial year but full-time income next financial year.
This "fixed" nature of property ownership rears its ugly head again. Despite hopes that joint expenses can be paid or incurred by one or other taxpayer tax law does NOT recognise that common law partnership expenses can be paid and claimed by any one owner. Only two ways to change this: Transfer of title or death.
A unit trust might also avoid this concern or provide some alternatives.
This question has also been posed by ATO in TR 2009/17 (dealing with Hybrid Trusts) which addresses the issue of a joint loan that may be used by say one unitholder to acquire units with a right to income...ATO view is that even a joint loan isnt always deductible in full. Imagine this...Sue & Dave jointly borrow $1m using their home as security. They use the $1m to acquire units in a trust which buys an IP. Trust issues 1% of units to Sue and 99% to Dave. Dave is a high income earner and a large neg gearing loss is expected. Sue earns a small income. Trust income flows to a joint account and pays the loan. A single monthly amount. This loan is deductible as 1% Sue and 99% Dave...Not 50/50.
The proportion of the borrowed $ must benefit the taxpayer in the same manner as a entitlement to income and capital gains.
A unit trust might also avoid this concern or provide some alternatives.
This question has also been posed by ATO in TR 2009/17 (dealing with Hybrid Trusts) which addresses the issue of a joint loan that may be used by say one unitholder to acquire units with a right to income...ATO view is that even a joint loan isnt always deductible in full. Imagine this...Sue & Dave jointly borrow $1m using their home as security. They use the $1m to acquire units in a trust which buys an IP. Trust issues 1% of units to Sue and 99% to Dave. Dave is a high income earner and a large neg gearing loss is expected. Sue earns a small income. Trust income flows to a joint account and pays the loan. A single monthly amount. This loan is deductible as 1% Sue and 99% Dave...Not 50/50.
The proportion of the borrowed $ must benefit the taxpayer in the same manner as a entitlement to income and capital gains.
If you are a individual taxpayer the answer is Yes. Most lenders are also happy to allow a year (max) prepaid interest too. However if you dont repeat prepayments in the next yar you can create a tax problem for next year.
Prepayments that exceed 12months can pose a concern as tax law requires the expense to be apportioned across the periods where the cost was incurred.
Really? Are you saying it is illegal??Part IVA Anti-avoidance in all of the above
Highly likely. If you intend to restructure affairs to obtain a tax benefit...Yes might fall under the umbrella of a scheme. Schemes can be both legit and dodgy. Same as a share "wash sale" just before 30 June. Its an arrangement intended to obtain a tax benefit.
Q : is the arrangement undertaken likely to result in a tax benefit ?
Q : Is the predominant purpose the tax benefit ?
What altered me was you asked the question and proposed three options. Thats a Part IVA behaviour. Doesnt mean its "illegal". ie : Paying a deductible expense pre-June isnt a scheme. Its common sense.
1. "Shift my income"...That's not something to write.
2 + 3 may not be schemes...Structuring your investment affairs to provide a tax outcome isnt a scheme.
I was drawing your attention to this issue.
Q : is the arrangement undertaken likely to result in a tax benefit ?
Q : Is the predominant purpose the tax benefit ?
What altered me was you asked the question and proposed three options. Thats a Part IVA behaviour. Doesnt mean its "illegal". ie : Paying a deductible expense pre-June isnt a scheme. Its common sense.
1. "Shift my income"...That's not something to write.
2 + 3 may not be schemes...Structuring your investment affairs to provide a tax outcome isnt a scheme.
I was drawing your attention to this issue.
Thanks for that Paul.
"Shift my income" - May be I didn't say it correctly
Currently I'm on normal wage. Any income comes to me personally.
If I take up a contract job under our business (under a discretionary trust) then my personal income would stop. Any generated income under the discretionary trust can be distributed according to what is allowed. That is what I meant by 'shift'.
I'm shifting where I sell my time
"Shift my income" - May be I didn't say it correctly
Currently I'm on normal wage. Any income comes to me personally.
If I take up a contract job under our business (under a discretionary trust) then my personal income would stop. Any generated income under the discretionary trust can be distributed according to what is allowed. That is what I meant by 'shift'.
I'm shifting where I sell my time
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