Tax deductability

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From: Michael Mudman


Let me get this straight. If I buy a dual occupancy residence (a house split into two flats), and rent one flat out and live in the other, I can claim 50% of all interest, depreciation, rates, insurance etc as a tax deduction.

Add to this, if I 'rent' half of my flat out to the wife at market rent, I can then claim a further 25% of the total costs as a tax deduction. So basically I have now purchased a place of residence that is 75% tax deductible???

Is this correct? (Thanks in advance).
 
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Reply: 1
From: Mark Laszczuk


Michael,
I'm not an accountant, but I reckon I can pretty confidently say that you can't rent out half of the place you are living in to your wife and claim deduction. Otherwise, every person in Australia would be doing this. Imagine it: husband and wife buy house, split share 50/50. They then proceed to 'rent' their half to the other person at market rents and claim the deduction. Bingo, bango, your PPOR is now a fully deductible house! Sorry, but I don't think so.

Mark
'no hat, some cattle'
 
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Reply: 2
From: Property Investor


Hi Mark,

How about if you rent out the residence to wife, brother and sister therefore creating a split of 25/75?

Sorry I thought this was hilarious.

Michael your question in fact was not bad. Very creative!!
I love listening to creative ideas because as crazy as some usually sound, you can sometimes take a nothing and make it into a something.

Regards,
Mannie.
 
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Reply: 2.1
From: Mark Laszczuk


Mannie,
Why not just get all your family and friend's involved! If you squeeze enough people in, you could get it to 99.9%. Don't know how much privacy you'd have when you go to the loo though. Maybe if you lived in Toorak? See you on Thursday night.

Mark
'no hat, some cattle'
 
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Reply: 2.1.1
From: Property Investor


Hi Mark,

For some reason I knew you were going to come back with that answer. Hehehe.

However we need to always encourage people thinking outside the square. These are the people that will bring out their undeveloped potential and become very successful.

Michael please, do not feel bad about us having a little joke about this.
We all got to have a good sense of humor!

Mark I will see you at the property investment meeting on Thursday.
Don't forget your cap!!!!!

Regards,
Mannie.
 
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Reply: 2.1.1.1
From: Michael Mudman


OK guys, what if you had a 2 bedroom property in your name and you rented half out to a friend (or stranger). You had equal access to half of the house each, one bedroom each and 50/50 to all common areas. Wouldn't the expenses be 50% deductible because half of the house is producing an income for you?

So then, what if this person was actually your fiance with no marriage certificate or joint bank accounts to connect the two of you together. Wouldn't the same still apply? If you take this one step further and you already had the upstairs section of the house occupied by tenants, wouldn't you get the 75% deduction?

And finally, are you sure you can't rent half of your house out to your wife if the whole property is in your name only???

By the way, I like the jokes.

Mick.
 
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Reply: 2.1.1.1.1
From: Michael Mudman


Or should I get a divorce?
 
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Reply: 2.1.1.1.1.1
From: The Husband


Michael

Just get a 'flatmate'.

And don't forget to claim depreciation on all furnture, knives and forks etc etc (Thanks to the person on this forum for this idea!).

TH
 
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Reply: 2.1.1.1.1.1.1
From: Mark Laszczuk


Michael,
Now please remember I'm not an accountant, get advice from someone who knows... but my guess is that if your partner is not related to you through marriage, you could probably do it. But I'd say that after you get married, that would be the end of it. But like I said, I'm not an accountant. Go to a professional for concrete advice. And good luck with your ideas, I think they're great! When I was running my own small business, I would be throwing out 99 out of a hundred ideas right off the bat, and sifting through the rest, only to throw out most of those as well. Just goes with the territory. Remember, most successful discoveries come from many failed attempts. Just ask the Wright brothers (and Colonel Sanders).

Mark
'no hat, some cattle'
 
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Reply: 2.1.1.1.1.1.1.1
From: Samantha Lennox


Given that married couples won't be able to use this sort of structure I would think that defacto couples would be in the same position. Of course it's a matter of proving that you are/aren't defacto which is fairly flexible but if you've been calling yourself defacto in your tax returns then you're probably going to be stuck.
 
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