Relative as PM ?

Am interested whether the following would have any issue/tax implications.

IP property being rented out per room with a room being reserved for a manager. This manager is responsible for collecting rent and ensure the property is being looked after. This manager would pay no rent as he/she is solely responsible on looking after the property.

This manager would be our parents.

So to the tax man, it would be a house being rented out room per room (lets assume there are 4 rooms in the house). 3 room's rental is declared as income say a total of $450, where the average rental for the house would be say $500 per week.

What sort of issues and or tax implications would there be compare to say us renting the whole house out and it being managed by external property manager?

PS. obviously this would only work for two properties as we only have two pairs of parents. :)
 
If you declare the $150 you are not getting from your parents I see no problem with it.

Its a bit of a gray area but another option would be to only claim 75% of the interest and show the 25% as owner occupied. You are not getting a tax deduction but you won't be paying Capital Gains Tax for that 25% portion either.

Ofcourse there could be other implications due to your individual circumstances so my suggestion would be to see your accountant
 
Ah ok. Thanks BV, I do plan to see my accountant about what I have in mind but thought I'd see if there are anything that I need to prepare in advance thats all. Was also very interested in seeing if others have done the same. :)
 
If you declare the $150 you are not getting from your parents I see no problem with it.

Its a bit of a gray area but another option would be to only claim 75% of the interest and show the 25% as owner occupied. You are not getting a tax deduction but you won't be paying Capital Gains Tax for that 25% portion either.

Ofcourse there could be other implications due to your individual circumstances so my suggestion would be to see your accountant



You will be responsible for 100% capital gains as you are not using it as a PPOR. The fact that you parents are living there is not relevant. Unless you actually live there then the entire property is treated as an investment. If you rent out 3 of the 4 bedrooms then (i.e. 75% of the property), then you can claim 75% of interest and all other expenses.
Marg
 
Or charge the parents $150pw rent, then pay them $150pw as management fees.

Hrmm.. I love this idea! definitely one something I can hit up me accountant about :D

Thanks for the info Marg, that was something I sorta guess too before going to my accountant for confirmation.
 
Or charge the parents $150pw rent, then pay them $150pw as management fees.

Are your parents pensioners? If so, this $150 payment to them may reduce their pension payments and I would think that you would have to pay the government tax on this amount (on their behalf).
 
What the Tax office looks at is "intent".

How you rent out to your relatives doesn't really matter - what does matter is whether you had intent to breach the system - they have to catch you first...but if they do and you have done something naughty...well...that's another matter. Sometimes, nicer to live quietly under the radar.
 
Get some advice on managing properties without an agent's license. You may not be covered by insurance if anything goes wrong for one and there could be fines involved but check it out. X
 
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