Vacant for 52 weeks

J

JKfalcon

Hi All,

Just have an idea of leaving an investment property vacant for a extended period (a year or more), and claiming the entire thing as a loss against my income. Is this legal, to deliberately leave a house empty ??

Next part is, which i know is illegal:), but If I rent this house to a mate off the books and he pays cash is there anyway that it could go pear shaped..... just seems like a good opportunity to be able to collect some rent (cash in hand) and take advantage of some big tax savings (due to Zero rent for the year) ....

Just throwing the idea out there to see what the general consensus is or if anybody knows much about it / has experience with it

Thanks guys
 
It is legal to leave it empty.

But not legal to claim tax deductions if it was unavailable to rent.

This plan is fraud.
 
JKfalcon said:
Just have an idea of leaving an investment property vacant for a extended period (a year or more), and claiming the entire thing as a loss against my income. Is this legal, to deliberately leave a house empty ??
Click to expand...

Not sure about legal (since the rule is it has to be available for rent), but it's financially stupid. There is no way leaving the property empty will leave you financially better off than renting it out.

Say you have expenses of 15,000 and potential rent of 12,000. Leave it empty. What's your net after tax? At 30% tax rate, 10,500 LOSS. Rent it out. What's your net after tax? 2,100 loss. By leaving it vacant, you're losing out on 8,400 after tax. Still think that's smart?

JKfalcon said:
Next part is, which i know is illegal:), but If I rent this house to a mate off the books and he pays cash is there anyway that it could go pear shaped..... just seems like a good opportunity to be able to collect some rent (cash in hand) and take advantage of some big tax savings (due to Zero rent for the year) ....
Click to expand...

That's not a 'good opportunity'. That's illegal. And you know it. Why ask?
 
Besides being illegal and fraudulent, don't forget the ATO has substantial information gathering powers. They can find out whose name the electricity and gas is in etc.
 
JKfalcon said:
Next part is, which i know is illegal:), but If I rent this house to a mate off the books and he pays cash is there anyway that it could go pear shaped..... just seems like a good opportunity to be able to collect some rent (cash in hand) and take advantage of some big tax savings (due to Zero rent for the year) ....
Click to expand...

What's your insurance cover like on an self managed vacant house?
 
Sounds like you are planning a holiday at Government expense in a lock-up facility.
It's called fraud.
It is illegal and can result in jail time.

However, I am sure you are joking.
Marg
 
What if you advertised the house as available for rent at a highish price. In the meantime you had a mate stay there.
 
Renting to a mate for cash doesn't have to be illegal, you just have to think outside the box and have a good mate you can trust.

What about this scenario?
Hi Mate, would you like to live in my property rent free while its vacant but available for rent at a fairly high price? I just need someone to look after it.

Sure Whatever123, thats very generous of you. And on a completely unrelated note, I haven't given you a birthday present yet this year. Here, have 5 grand.
 
So you want to rent your place out for cash in hand, while I pay for your fully claimed loss against your income out of my own hard earned income tax?

You're dodgy = fraud.

Even if your mate moves in and pays cash. The records with the utilities companies will show up clearly that someone was living there the whole time.
 
JKfalcon said:
Hi All,

Just have an idea of leaving an investment property vacant for a extended period (a year or more), and claiming the entire thing as a loss against my income. Is this legal, to deliberately leave a house empty ??

Next part is, which i know is illegal:), but If I rent this house to a mate off the books and he pays cash is there anyway that it could go pear shaped..... just seems like a good opportunity to be able to collect some rent (cash in hand) and take advantage of some big tax savings (due to Zero rent for the year) ....

Just throwing the idea out there to see what the general consensus is or if anybody knows much about it / has experience with it

Thanks guys
Click to expand...

You are either a survey company or else are some student doing a project on ethics.

Either way, illegal or immoral receipts are still income.

Deductions are claimable against assessable income, even ones mentioned above unless a specific non-deduction or an anti-avoidance provision applies.

Overall, the ATO would probably treat all your arrangements as a private and domestic relationship and not assess the income nor allow deductions where the latter exceeds the former.

Negligently or recklessly filing a tax return is an offence, however. It is a statutory declaration.

Cheers,

Rob
 
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JKfalcon said:
Hi All,

Just have an idea of leaving an investment property vacant for a extended period (a year or more), and claiming the entire thing as a loss against my income. Is this legal, to deliberately leave a house empty ??

Next part is, which i know is illegal:), but If I rent this house to a mate off the books and he pays cash is there anyway that it could go pear shaped..... just seems like a good opportunity to be able to collect some rent (cash in hand) and take advantage of some big tax savings (due to Zero rent for the year) ....

Just throwing the idea out there to see what the general consensus is or if anybody knows much about it / has experience with it

Thanks guys
Click to expand...

have you ever been audited by the ATO? no? well, you're plan guarantees you will be.

ever lived in a share house? well, you're plan will probably mean you get to, only you don't get to pick your flat mates.
 
Are you stupid?

If you want to leave it vacant do so, but there's no way that leaving it vacant is smarter then renting it out.

If you want cash in hand, there's no issue if you claim the income, if not you're asking to be investigated.

I've seen many of our LLs investigated for fraud - it ain't pretty. Just play by the rules that way you don't get locked up.
 
I hope that if you do go ahead with such a plan, that you get caught. That is fraud and extremely illegal. There are plenty of ways to get ahead that are legal, why not investigate those?
 
Ed Barton said:
have you ever been audited by the ATO? no? well, you're plan guarantees you will be.

ever lived in a share house? well, you're plan will probably mean you get to, only you don't get to pick your flat mates.
Click to expand...

Don't bend over if you drop the soap
 
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