Renting property to yourself



From: Grant Young

I would just like to know if there is a way that I can buy a unit (which I intend living in)as an investment property and then rent it back to myself. This would mean that I could claim all the rates, insurance etc. back on tax. Does anyone know if it is possible?

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Reply: 1
From: W W


You could do this by using a disrectionary trust. But you should think long term. Initially it may be negatively geared, but as rents rise over the years the shortfall will get less and less and then the trust will be making money and you will have to pay tax on that. (You will have to pay market rents otherwise the ATO may not allow it). Also a trust cannot distribute a loss, so it has to have other income which the loss can be offset against.

Another way may be to 'rent' it on paper to a family member initially, and then you can 'move in' later when it starts to make a profit.

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Reply: 1.1
From: Michael Yardney

Renting the house you live in from a family trust will achieve the result you are looking for
If or when you eventually sell the property you will have to pay capital gains tax on the profit and that could be considerable, as opposed to if it was your family home in your own name where no capital gains tax applies.
Michael Yardney
Metropole Properties
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Reply: 1.1.1
From: Brad Chapman

A possible way to circumvent both of these problems.

Rent the house from your trust on a 99 year lease.

Obviously if your trust ever needs to sell the house it will need to compensate you for breaking the lease. [need I say more]

Just a suggestion - one to run by an aggressive accountant.

Cheers - Brad
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