If we rented out our PPOR to friends, and then we rented their PPOR all at market rents and completely above board through a REA - is this legally allowed?, are there any other issues?
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If we rented out our PPOR to friends, and then we rented their PPOR all at market rents and completely above board through a REA - is this legally allowed?, are there any other issues?
That's called fraud.
Involves police.
ATO will probably prosecte.
Proceed with extreme caution...
Marg
I mean actually move into their place...and they move into our place.....completely above board, paying market rents - nothing illegal.
needs to be some place you will never sell.
Accountants/Lawyers look smart when they lecturing on these sort of schemes until it all comes unstuck. Why had he had 3 audits in 4 years?. Surely if the ATO were happy one audit would have been enough.
Why is that?
Gives you good asset protection, not really an issue until you have substantial holding but a very nice reason once you have lots to loose.Why bother. If you rent it off your Trust or superfund you will lose your PPR exemption. It could cost you a lot more than you initially save in tax. Yes you could say you would never sell but circumstances change.
It doesn't matter if you know the people you rent from. It really doesn't matter that you are doing it for tax purposes, if you are paying "reasonable rent" and it's done that same as any other rental agreement, it's legit. Treat it the same as buying a house and renting it out while renting the very same house next door that someone elese owns.Also why would you swap houses with a friend for any other reason than to get a tax advantage. If the predominant reason to do this for tax purposes the ATO will disallow your losses anyway and you are at risk of penalties and interest.
This one's easy - large organisations, the people doing the audit are different to those that flag an audit, different departments don't talk to each other, I'll go as far as saying teams in the same department don't talk to each other. The guys flagging audits see the trust and find the links to the tenant, therefore go and get someone to look. The guys that go and do the audit, could be the same person even, go back to work and whinge but not chance of getting the process to change. Large orgs are interesting to work in.Accountants/Lawyers look smart when they lecturing on these sort of schemes until it all comes unstuck. Why had he had 3 audits in 4 years?. Surely if the ATO were happy one audit would have been enough.
Had a chat with account a few years ago about this and he was sure it was legit, you should get a private ruling from ATO, the only issue for us was the fact that we bought in our names and would have to sell to trust at market rates and then pay stamp duty on that.Why not just rent your own PPoR off your own trust/super fund.
No point yi.....all of that shenanigans for nothing, or so I'm reliably informed.
I'm presuming you are jumping through all of those hoops so you can get the interest component of the loans to be tax-deductible.
Why not just rent your own PPoR off your own trust/super fund.
Went to a lecture last Tuesday where some young chap has been doing this for the past 4 years, and has been audited by the ATO because of it no less than 3 times....all coming out as clean as a whistle. JoeD from this forum was also at the lecture and he can probably vouch that this guy (aged 26) was impressive.
Tax lawyer and accountant - knew his stuff.
Anyway, that would be my suggestion, rent it off yourself, claim the tax deduction and also avoid all of those "slippery slope" things Alexlee mentioned.
It will cost you $ to set up correctly....but it can be done.