Renting IP to family.

[BlackSpider]

Hi Guys,

Wondering if anybody could offer some advice on this scenario.
Wife and I are currently building a duplex and are planning to rent one side out to my parents to live in, they will pay market rent.

I'm thinking that we might sell our PPOR (only other property) and move into the other half of the duplex.

Can I say we are renting both sides of the duplex to my parents at market rent and we pay them cash for our half, so it is still operating as an IP?

Are there any disadvantages in doing this?
Is there a better way to do it?

Thanks for any advice.



Spider

 

[Mr. Fabulous]

Are there any disadvantages in doing this?

If the ATO catches on, you'll be naff. Lots of handing over of money will occur.

Mark

 

[Perp]

Can I say we are renting both sides of the duplex to my parents at market rent and we pay them cash for our half, so it is still operating as an IP?

Are there any disadvantages in doing this?

Are you serious? This is not even close to legal - it's highly illegal and if implemented and exposed, I would hope attracts more than a trivial fine! So, yes, the disadvantages are that it's illegal and you could end up in jail.

What are you trying to achieve? Negative gearing? If so, why move into it? Why not just rent it out to a tenant at arms length?

 

[Mr. Fabulous]

On a side note, what kind of crazy ....person wants to live next door to their parents? Can't let go of the apron strings, huh?

Mark

 

[BlackSpider]

Thanks for the advice.

So I suppose I'll move into one half of the duplex and just claim the other half as an IP.
Or may just rent both out depending on circumstances at the time.


Thanks

Spider

 

[Boyler_Room]

First off, yes you can rent one side of the duplex to your family at market rent rates. No problem there.

The problem people were commenting on was when you said you wanted to live in the other side and "pretend" it was an IP. That would be like any of us buying a house as a PPOR and claiming interest on it as if it were an IP. Not on.

If you want to live in one side you CANNOT claim it as a tax deduction. If you decide to rent it out then you shouldn't have any problems, but as always, seek independent advice specific to your circumstances.

Cheers
BR

 

[Bradsdad]

On a side note, what kind of crazy ....person wants to live next door to their parents? Can't let go of the apron strings, huh?

Mark

Babysitting is the only advantage