Renting to family
- Thread starter vmmg1992
- Start date
keep a spreadsheet of rent received and your usual property expenses.
I've done this (rented to family).....
........but most prob never again.
I purchased a receipt book (carbon) and issued them when payments rec'd stating what it was for & other appropriate info (ie: names, rent paid for dates, property address).
Are you renting close to market rates?
The ATO might not allow claims if you're renting to a related party at a great discount.
Be very careful about this!
........but most prob never again.
I purchased a receipt book (carbon) and issued them when payments rec'd stating what it was for & other appropriate info (ie: names, rent paid for dates, property address).
Are you renting close to market rates?
The ATO might not allow claims if you're renting to a related party at a great discount.
Be very careful about this!
As mentioned be cautious of renting under market value... if you're claiming the interest on a property you purchased for full market value don't expect the ATO to like you renting it below market value.
Firstly, it does not matter how they pay, you need to keep a record of rental payments received. Recepit book, spreadsheet, whatever works.
Secondly, you don't "claim tax". You declare all your rental income and all your associated expenses, such as mortage interest, insurance, rates, maintenance etc. If there is an imbalance, you will either pay tax on the excess at your marginal rate or claim a tax deduction for the loss. (I guess this is what you meant).
As others have said, make sure you are charging market rent or the ATO will not allow you to claim 100% of your expenses.
Make sure you have a lease in place and submit the bond to the appropraite authority. Also make sure you have building & contents insurance in place as well as Landlords insurance.
Treat everything as a business and at-arms-length.
Yep...........as I mentioned, danger all round - doesn't mean it can't work, but a lot of times you get taken advantage of - and it can kill a marriage........ believe me, I have seen it happen in my own family - not me luckily.
My incident only lasted several weeks, then it was eviction time - the old fashioned way
My incident only lasted several weeks, then it was eviction time - the old fashioned way
Yep...........as I mentioned, danger all round - doesn't mean it can't work, but a lot of times you get taken advantage of - and it can kill a marriage........ believe me, I have seen it happen in my own family - not me luckily.
My incident only lasted several weeks, then it was eviction time - the old fashioned way
Having brushed the outer edges of this type of situation.... Don't, just... don't
Beware! Ive had a bad experience renting to a good friend, let alone family! Hence, why we are no longer friends!
I'm no accountant, but mine has told me previously that it's OK so long as at "market value".
I found some extra stuff at the ATO that should explain it further.
To me (at least), as long as at market value, proper lease etc (as per normal commercial arrangement) AND that your original intent/purpose was not to "help" relatives/friends, then you might be OK. So.....it would probably be better if this was an existing IP that you have previously rented to a "commercial tenant" and not just purchased to help out a family member /friend & that you rented for same as previous amount.
But then I'm not the ATO
Page 12 of this http://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/ind00342353n17290613.pdf
EXAMPLE 7: Renting to a family member
and Here => http://law.ato.gov.au/atolaw/view.htm?DocID=ITR/IT2167/NAT/ATO/00001
Section under "Letting of property to relatives" looks interesting.
