Hi guys, got a quick one - After 8 years, a wedding and a grandbaby on the way, I've managed to convince the inlaws that I'm a nice guy and now they love me. To prove this, they've decided that they'd like to purchase an IP and have us live there on reduced rent - it's a brand new place so the depreciation is great, and after 12 months I insist on paying market rent anyway. The reason they're doing this is because they're fairly well off themselves and would like to help us along on our own property journey!
Their question is - if we pay them $200pw rent on a property for which they may be able to get $300-$320 (or even higher) market value, will the tax man care? They seem to think that they'd need us to pay the full rent, and then they could deposit the difference back into our bank account every month.
This seems a bit odd to me, as I don't see what business the taxman has if they choose to rent out the place for lower rent - in fact, I'm fairly sure that there's even tax benefits to suppying housing at below market rent, although I won't pretend I'm a genius about elegibility for it!
Thoughts kids?
-Adam
Their question is - if we pay them $200pw rent on a property for which they may be able to get $300-$320 (or even higher) market value, will the tax man care? They seem to think that they'd need us to pay the full rent, and then they could deposit the difference back into our bank account every month.
This seems a bit odd to me, as I don't see what business the taxman has if they choose to rent out the place for lower rent - in fact, I'm fairly sure that there's even tax benefits to suppying housing at below market rent, although I won't pretend I'm a genius about elegibility for it!
Thoughts kids?
-Adam