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Property Business

Discussion in 'Accounting, Tax & Legal' started by Triu, 2nd Sep, 2006.

  1. Triu

    Triu Well-Known Member

    Joined:
    1st Sep, 2006
    Posts:
    161
    Location:
    WA
    Hi can anyone please shed some light on this subject. I have read that to be in the business of a professional property investor according to the Tax Office that you must have at least 3 investment properties. But i read somewhere further that a couple had 14 IP's but was not in the business of property because they had a property manager managing their portfolio.

    My question is this if i want to be classed as a professiona investor through my HDT can i still claim business expenses such as interest deductibility etc if i still use a property manager to run them for me. Or do i have to manage them myself etc with regard paying rent and maintainence etc.

    Please help thanks again

    Triu
     
  2. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    deductability of interest does not depend on any "classification" as an investor. it depends on the purpose to which you apply the borrowed funds. buying an income producing asset with the borrowed money will keep you in happy deductability :)

    N
     
  3. NickM

    NickM Co-founder Staff Member

    Joined:
    20th Jun, 2005
    Posts:
    321
    Location:
    Sydney
    Triu
    I think you will find that those people held the properties in their own names.
    They would more than likely also had jobs that paid more than the net profit from the IP's. This is the line i Have seen the ATO take in the past.

    A HDT with 3-4 properties is different. It has an ABN and all it does is invest.

    I think the use of managing agents is just another factor the ATO considers
    NickM