Renting villa to your mum.

Hi all,

My brother owns a little 2 bedroom villa in St Marys. We are going to be moving our mum into it in the next few months as she needs to down size.

Currently it is rented through a real estate for $300 pw, when we move mum in she will pay him $250 directly.

Obviously being our mum we arent going to slug her with bond or anything like that.

What would be the best way of approaching this? The villas are under strata if that makes any difference.

Thanks again.
 
Regardless of who it is, put a lease in place (download from fair trading website), a bond is not mandatory. The lease together with the strata by-laws cement the rights of the parties for the 'what ifs'.
 
Currently it is rented through a real estate for $300 pw, when we move mum in she will pay him $250 directly.

....and bear in mind that if you rent at under-market rates, you are not entitled to claim 100% of the deductions you normally could - depreciation, rates, strata, mortgage interest etc.
 
....and bear in mind that if you rent at under-market rates, you are not entitled to claim 100% of the deductions you normally could - depreciation, rates, strata, mortgage interest etc.

I guess 'technically' she will still rent it at market rent. Just to make things easier for my brother at tax time.
 
Mother has $300 a week (market rent) direct debited from her account each week. Her sons then give her money back each week to help with living expenses...
 
Regardless of who it is, put a lease in place (download from fair trading website), a bond is not mandatory. The lease together with the strata by-laws cement the rights of the parties for the 'what ifs'.

Are these required as a kind of proof of tenancy as well? confirming the place is an IP) come tax time? Or are the rental payment's evidence enough?
 
Been doing this for many years. I get an agent rent appraisal done every few years and from that I deduct 10% for a no-agent arrangement and call that market rent. It is direct debited monthly.

I also give my Mum lots of gifts, but that has nothing to do with this.
 
Been doing this for many years. I get an agent rent appraisal done every few years and from that I deduct 10% for a no-agent arrangement and call that market rent. It is direct debited monthly.

I also give my Mum lots of gifts, but that has nothing to do with this.

That would be better as otherwise the OP is paying tax on $300. So Daniel I would get mum to pay $270 max (as twodogs says- that would be OK to call market rent).

Glad you give your mum gifts.:D
 
Are these required as a kind of proof of tenancy as well? confirming the place is an IP) come tax time? Or are the rental payment's evidence enough?

It's not required to prove tenancy but it serves to protect your rights should things turn sour.

Just avoids you being dragged up on today tonight as an unscrupulous landlord trying to kick out a defenseless little old lady in 10 years time because the arrangement is verbal and you've had a spat with your mum.
 
question:

in the case above market rent is $300 and if mum is renting it for 200p/w (under market rate)

At tax return how does the ATO knows that 200 is under market rate?

surely they not going to go around to check if everything is receiving market rate. and some for tenants of mine, since they have been good I have not increase rent from them for years... well that 'below market rent'
 
surely they not going to go around to check if everything is receiving market rate.
They will check if you're audited, and they have extensive databases that detect anomalies.

If you've just kept rent a bit below market for a good tenant, I would think it's unlikely to be problematic provided its an arms-length situation and the rent isn't absurdly low.
 
Loony,

Remember its all just numbers in a computer. If postcode 2000 is given, along with $50k worth of investment expenses and interest, but only $20k worth of rental income declared, then that's going to seem out of place compared to other numbers other people are submitting, right?
 
Lucky I read this post!

I was planning to 'rent' a place of mine to my parents.

Love this forum always learnt somthing new..

I guess the postcode check to see if it's market value is powerful
 
Been doing this for many years. I get an agent rent appraisal done every few years and from that I deduct 10% for a no-agent arrangement and call that market rent. It is direct debited monthly.

I also give my Mum lots of gifts, but that has nothing to do with this.

Downside is property is cash flow positive and I potentially pay tax. Gifts don't reduce the income...

Upside is my Mum gets to live in a nice place she could not otherwise afford, with a garden, only a few steps and with a dog. All good.

And downside... is my serviceability is now more crap.

And upside... is great capital growth.
 
It's not fraud, she will be paying full market rent to my brother and i will give her money each week to help with expenses.

Are you implying i should let my pensioner mum with no money starve?
 
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