Renting to family

Discussion in 'Accounting & Tax' started by jrc77, 15th Sep, 2008.

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  1. jrc77

    jrc77 Well-Known Member

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    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
     
    jrc77, 15th Sep, 2008
    #1
  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    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
     
    Simon Hampel, 15th Sep, 2008
    #2
  3. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    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
     
    Mark Laszczuk, 15th Sep, 2008
    #3
  4. BillV

    BillV Well-Known Member

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    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
     
    BillV, 15th Sep, 2008
    #4