Half share in investment home

[RamonR]

Me and my partner bought a nice property in coastal hinterlands.
Have a very good chance of getting job there in years time and so we planned on renting it out till then.

When the time came partner became very picky and anxious about tenants ruining our place even though at the appropriate time we hoped to renovate it as house is prior 1985.

Anyway to cut a long story short, I will be moving into the property and paying her rent.
We have two separate lines of credit but both name will be on the loans.
Property is held under a tenants in common agreement
Will it be possible for her to negative gear this property whilst I am living there but not her.

I realize this forum is mainly about shares but have posted same question on aussie stock forum and no answer. Seems it doesn't have anywhere near the same number of knowledgeable members as this forum does.

 

[RazzaDazzla]

Interested to the reply on this.

I'm sure a phone call to your accountant would be a good first point of call.

Commonsense says to me that you would pay a market rent. 50% to yourself, 50% to your partner. As for the negative gearing... hmmm... I'm sure the Taxman has a few tricks up his sleeve here.

Any chance you could rent the property out to a mate and he would be kind enough to then let you sleep there for a case of beer a week?
Your mate rents the place from you two, but he spends most of his time at his other place of residence. Then the missus and you negative gear, the mate spends most of his time at his other residence and you spend most of your time visiting the place that your mate is renting from you two.

 

[RamonR]

I figure I don't have to pay myself any rent as it will be my primary residence and I won't be claiming anything.

Do plan on paying partner half of market rate. Actually slightly less then half because don't have to worry about losing any of it to property manager and she also has a tenant who will look after the place like it was his own.

Do plan on seeing accountant next week but sought some answer until then as this worry is keeping me up at night. I know I am going to take a hit financially but have made good money in shares and can afford it. Just worried about afford ability for her is she is not able to claim interest as expected.

 

[demiser]

Hi RamonR,
Yes it is possible for her to gear her half, however make sure you keep good records.

I am in a similar situation and I pay rent to the other owner of my household (whom doesn't live here). They are able to gear their loan as well as claim deductions for the general expenses (rates, maintenance, etc)

Obviously they can only claim for half the expenses, and things like insurance can get a bit tricky (they can claim the house insurance, but not the contents insurance).

Other than that, it's all pretty straight forward.

 

[gooner]

partner will also have to pay cgt and maybe land tax, threshold dependent