Hi, I own a 3 beds unit which I live in. This is my first property, I live in the master room and rent out the other 2 bedrooms. So it's like a partial investment property. What is best way to go around about my taxes? Should I be claiming it and how much should I claim? I'm very unsavvy to this (both property and taxes) and if you can shed some light on my situation or point me to the right direction/person, it would be great. Thanks!
Should I claim tax for my shared property?
- Thread starter chh
- Start date
You have 2 options
A) Call them tenants, declare the rent they've paid you and then claim a portion of rates, insurance, depreciation, interest, etc Down side of this is that you'll also have to pay a portion of CGT if you sell
B) Call them boarders. Keep the money. Have fun.
Do the sums, run them by your accountant. The CGT is the main one.
A) Call them tenants, declare the rent they've paid you and then claim a portion of rates, insurance, depreciation, interest, etc Down side of this is that you'll also have to pay a portion of CGT if you sell
B) Call them boarders. Keep the money. Have fun.
Do the sums, run them by your accountant. The CGT is the main one.
Thanks for the quick replies!
Does it make any different if I've already claimed a partial of that income for the last tax return? Is it ok to tell ATO that this year I didn't rent out any room and lived in there as owner occupied? Will they check my bank statements for the income? How about claiming only 6 months rental income and 6 months owner occupied? I have a few months of rental income done via bank transfer and the rest in cash. I just want to maximize my tax return without doing anything that will bite me back later.
Does it make any different if I've already claimed a partial of that income for the last tax return? Is it ok to tell ATO that this year I didn't rent out any room and lived in there as owner occupied? Will they check my bank statements for the income? How about claiming only 6 months rental income and 6 months owner occupied? I have a few months of rental income done via bank transfer and the rest in cash. I just want to maximize my tax return without doing anything that will bite me back later.
As stated earlier, CGT could potentially hit your pocket hard when it comes time to sell. I would recommend getting an accountant to guide you through your options. Your decision will depend on stacking the available deductions up against the timeframe you're holding this property and any gains it will make in that time.
The tax issues here are very clear. There is no option unless you choose evasion. (Thats a matter covered by the Crimes Act not tax law.) Detection by ATO would likely come from an anon ****** off resident or boyfriend, GF etc. They dob you in. ATO then validate it by asking you names of the tenents and what they paid. If you dont name same person and same rent $ as they know its a problem. They will ask vague question and you wont even realise how far you can incriminate yourself when they phone you. Once you tell one small lie its a full blown audit with high penalties. Assuming you want to have a clear conscience then :
- All rent, board or whatever its called is income. Its all taxable. Its therefore important you maximise deductions.
- Depreciation schedule ??? Its a good idea and may enhance deductions. Order it now and deduct for 2014 (100%). Backdate it two years or when this arrangement started
- Likely claim 2/3rds of all outgoings such as rates, interest etc.
- You may find the property is neg geared. Thats the aim.
- Furniture may be partialy depreciable, oven repairs etc....Its not all bad news.
When (if) you sell as you have resided then a partial main residence exemption applies. If its been rented the whole time then likely 2/3rd of any gain is taxable but reduced by 50% for the 12mth CGT discount.
You may also find a lender will see the value of the income generation and factor this ito refinance or other lending issues later.
- All rent, board or whatever its called is income. Its all taxable. Its therefore important you maximise deductions.
- Depreciation schedule ??? Its a good idea and may enhance deductions. Order it now and deduct for 2014 (100%). Backdate it two years or when this arrangement started
- Likely claim 2/3rds of all outgoings such as rates, interest etc.
- You may find the property is neg geared. Thats the aim.
- Furniture may be partialy depreciable, oven repairs etc....Its not all bad news.
When (if) you sell as you have resided then a partial main residence exemption applies. If its been rented the whole time then likely 2/3rd of any gain is taxable but reduced by 50% for the 12mth CGT discount.
You may also find a lender will see the value of the income generation and factor this ito refinance or other lending issues later.
