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Renting to family

Discussion in 'Real Estate' started by jrc77, 15th Sep, 2008.

  1. jrc77

    jrc77 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    147
    I am looking at going overseas for about a year and am looking at renting out my unit to my sister-in-law while away - hence avoiding agents fees etc. What do I need to do to ensure that I can claim expenses incurred (strata fees, council rates and water) against it as a IP? There is no interest expenses for the propery (although there is borrowed money for shares that is secured against property).

    Are there any complications if we leave some stuff in the apartment and charge lower rent as we would effectively be using one room for storage?

    Any help would be appreciated.

    Regards,

    JR
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    You should make sure you are charging market rent - otherwise the ATO may only allow a pro-rata claim of expenses.

    The ATO's rental property guide has some examples you should read (page 7 and 8)

    Rental properties 2007-08
     
  3. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    Rules of Investing:

    Rule no. 1: Never ever invest or get financially involved with family or friends.
    Rule no. 2: When in doubt, see Rule no. 1.

    Mark
     
  4. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Rule No 3
    There are exemptions to all rules...;)
    The point Mark is making is that if the deal turns sour then you will lose your friend or relative.

    I'd rather rent to someone I know.

    You can charge a lower rent if you are not renting out all the property
    but then you will have to apportion part of the expenses and any interest paid to the bank as well.

    IMHO