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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?
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?
Like many things, it sounds good in theory, but in practice life is a bit messy....
What happens if you need to move?
What happens if they need to move?
What happens if the bread winner of the other family loses their job?
What if you want to add a garden shed, or replace a fence, and the other family can't afford/don't want to do it?
Just dont have a PPOR. Buy lots of IPs and dont sell any of them.
Alex, I am curious as to why you are getting emails from your tenants about their rent rises? Don't you have a PM?
I thought TR 2002/18 pretty much disallowed interest deductions for renting your PPoR from a trust.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.
Why bother.
Just dont have a PPOR. Buy lots of IPs and dont sell any of them.
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?
The big issue here is capital gains tax exmption. It was mentioned briefly but not spelt out.
If you own a place you live in, abd sell, any profit you make is tax free.
If you own a place you don't live in, and sell, any profit is taxable (capital gains tax).
If you have invested properly, any capital gains will far exceed any losses made along the way. That's the big thing about investing in property.
So by renting to each other you can have tax advantages in the short term, but potentially much bigger disadvantages when you sell.
Noel Whittaker and Julia Hartman write about this strategy in a book called "Saving Tax on your Investment Property".
Page 121. "The House Swapping Trick."