Renting out my own house

[tyrone]

Hi guys and girls I have a question.

Is it okay to turn my ppor to an ip, rent it to my father and then I rent a room off him?

I'm going away to work up north and will be on quite good coin and paying a lot of tax
so I thought it would be good to ng the prop.

Also I explained this to someone else and they said that it may not be a good idea to turn it to an ip as I will have to pay tax if I was to ever sell. Can someone please explain what are the pros and cons of both as I'm not sure what to do.

Thanks

 

[streetie]

Hi guys and girls I have a question.

Is it okay to turn my ppor to an ip, rent it to my father and then I rent a room off him?

I'm going away to work up north and will be on quite good coin and paying a lot of tax
so I thought it would be good to ng the prop.

Also I explained this to someone else and they said that it may not be a good idea to turn it to an ip as I will have to pay tax if I was to ever sell. Can someone please explain what are the pros and cons of both as I'm not sure what to do.

Thanks

As far as I know which isn't much , it would be no. It sounds like you would be scamming the system , claiming all the tax benefits and still living in your own house.
And I think if you were to sell it, you wouldn't pay any CGT as long as you sold it before 6 years of when you turned it into an a IP.

Others can confirm this

 

[Aaron_C]

How can it be an IP if you are living in it as well?

 

[tyrone]

How can it be an IP if you are living in it as well?

Well I would rent it out to my father on the books and live in it aswell

 

[Aaron_C]

Well I would rent it out to my father on the books and live in it aswell

And where would your official address be?

 

[Propertunity]

Is it okay to turn my ppor to an ip, rent it to my father

Yes, you can turn your PPOR into an IP.
Just make sure if you are claiming all the expenses that you can only do so, if you are charging (in this case your father), market rates of rent.

and then I rent a room off him?

I guess so. So in effect he would be sub-letting back to you.

It may be better, to only lease the entire property to him, on the basis that, one bedroom is excluded from his lease (for your personal use) and the expenses you claim, exclude the bedroom not in his lease.

I'm going away to work up north and will be on quite good coin and paying a lot of tax so I thought it would be good to ng the prop.

Good idea, if you can make it work.

Also I explained this to someone else and they said that it may not be a good idea to turn it to an ip as I will have to pay tax if I was to ever sell.

You could (??) claim the 6 year rule if you have no other PPOR, without paying CGT when you eventually sell.

However, this rule is more for you being posted away for work (as you are being), but not returning occassionally to live in one of the rooms.

Best to seek specific accounting advice on this aspect.

 

[tyrone]

Thanks propertunity!

Sorry but what would be the best profession to see about advice on what to do with my property's and my money. Just so I can get a strategy in place because I don't really know where I heading at the moment.

 

[westminster]

Hi guys and girls I have a question.

Is it okay to turn my ppor to an ip, rent it to my father and then I rent a room off him?

I'm going away to work up north and will be on quite good coin and paying a lot of tax
so I thought it would be good to ng the prop.

Also I explained this to someone else and they said that it may not be a good idea to turn it to an ip as I will have to pay tax if I was to ever sell. Can someone please explain what are the pros and cons of both as I'm not sure what to do.

Thanks

You can rent half the property to your Dad and then claim 50% costs. This would be the legal option - the ATO will audit you quick smart if you claim full deductions and it is still your legal address (they work these things out very easily!)
If you will be living up North perm and not FIFO then you can rent it fully to your Dad and claim all expenses. As you won't have another PPOR then you can keep renting out your PPOR and not pay CGT as long as you move back in within 6 years and not have another PPOR>
BTW congrats on getting back into the mining game.

 

[Propertunity]

Thanks propertunity!

Sorry but what would be the best profession to see about advice on what to do with my property's and my money. Just so I can get a strategy in place because I don't really know where I heading at the moment.

I'd start with a property-savvy Accountant. Also talk to a property Legal-type person (lawyer).

 

[Terry_w]

6 year rule only applies to absences. If you are living there you are unlikely to be absent.

 

[tyrone]

thanks everyone!

 

[Ironlady]

Hi tyrone

I cant see why you cant rent the house to your Dad legally.
He is your dad so you can visit when you like.
Our kids and grandkids are here all the time but they dont live here.
Making it your address may or maynot be a problem?
Not sure if that helps.

 

[JohnHenry]

How can it be an IP if you are living in it as well?

He is no longer living in it. Obviously all of the mailing address must be changed into some other address to convince ATO that it is now an Investment Property.

 

[Terry_w]

He is no longer living in it. Obviously all of the mailing address must be changed into some other address to convince ATO that it is now an Investment Property.

He said in the first post that he wanted to 'rent' a room from his dad.