By: ecchi.gaijin
6/08/2008
3:09 pm Yahoo! Profile:
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Perhaps, but the only real protection against divorce I see is seperate units could avoid a forced sale in the example of a duplex.
If it is an amicable divorce then they wouldn't really need the protection, if it is disputed then the non arms length nature of the dealings would be used as leverage to force a better settlement. |
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By: nessa_sarily_so
5/08/2008
2:52 pm Yahoo! Profile:
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What would happen if either couple were to split up?
At least if each couple bought their unit separately the other couple would be 'safe' in the worst case scenerio. |
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By: ecchi.gaijin
20/07/2008
11:27 am Yahoo! Profile:
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People buy investment properties to make profit's on resale. Negative gearing is a means to minimise your cash outlays while waiting for that gain. Aside from depreciation and a few other non cash items, negative gearing means paying $1 to save at most 45 cents.
As far as I see the things that would work for you in explain how you entered into this type of arrangement for a commercial reason would be as follows;
location of properties to work, schools etc
timing of purchases (ie at same time is more suspicious than say a year apart)
size of house is a good factor
personal financial position (ie if either of you can afford to buy now, and the other has to save up another 6 to 12 months)
Keep in mind that you should not purchase a property to meet these requirements if at the end of the day you won't make any profit on resale. In most cases the gain on resale will outweigh any gains on saving taxes.
Alternatively there is a way to avoid this headache. The ATO has supposedly given the OK for you to rent your own house to yourself. It is a little technical in how it must be structured and there are some major drawbacks (being you need to have a business to utelise the negative gearing, you would most likely have to pay capital gains tax) |
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By: palisander
19/07/2008
11:38 am Yahoo! Profile:
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Hmm I just looked up the Part IVA you mentioned and it does seem to be in place for this arrangement specifically!
Your suggestion about differing properties could help us avoid it I suppose.
Do you think if my brother owned a 3 bedroom property and we owned a 2 bedroom property that we could justify swapping and renting off each other because we have a child and they don't? So the reason for our swap was because we needed more room rather than for the negative gearing benefit?
Thanks heaps for pointing that out! |
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By: palisander
19/07/2008
11:10 am Yahoo! Profile:
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But surely don't all investment properties then fall into this category? People don't buy rental properties without the intention of gaining the negative gearing benefit. They enter into the financial agreement (mortgage etc)in the knowledge they receieve that tax benefit.
The only thing on paper would be that we owned a property we rented out and lived in a rental property. Everything else would be families "gifting" each other money here and there.
Thanks for the advice and I'll definitely look more into that and see how we can overcome it if needed. |
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By: ecchi.gaijin
18/07/2008
11:12 pm Yahoo! Profile:
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| This is a wonderful idea that has been around for quite some time. Problem being, under the old legislation there is this "little" section called Part IVA, which basically says that if you enter into an arrangement for the sole purpose to obtain a tax benefit then that tax benefit will be disallowed. The fact that you are related parties and living in such close vicinity to each other I think it would be extremely difficult to give a commercial reason why you are not living in your own premises. If you owned houses that were further apart and you owned a house close to your brothers work and alternatively he owned a house closer to your work, then it would be easier to explain why you "swapped" residences. |
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By: palisander
18/07/2008
8:21 pm Yahoo! Profile:
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My husband and I are living in a house with my brother and his fiance that we have bought together. So far (14 months in) it has been going brilliantly and allowed each of us financial flexibility we wouldn't have had in our own individual properties.
Problem is, we're all looking to move to another area of Sydney (both couples want to move to same area) but would like to have a bit more privacy i.e. our own properties.
I have heard an idea that sounds brilliant for us and wondered if anyone had experiences of this arrangement and/or could offer some tips or other short cuts to help us. Or perhaps you can spot some flaws in my scheme!
We would like to find a Duplex property where both sides of the house are for sale and of roughly equal value (ex-rental/investment property is likely to fit this bill). Then each of us purchase a side, but "rent" it out to the other. So in effect we would live in one side, but technically own the other. This allows us to negative gear the property, essentially allowing us only pay 2/3 of the property (going by the general 1/3 rule of investment property where you pay 1/3, rent covers 1/3 and tax benefits cover the other 1/3 ROUGHLY).
Obviously there would be some logistics involved in the paperwork side of things. But basically if we wanted to do some renovations on the house we lived in (technically owned by the other couple) we would pay for the renovations ourselves, but have the receipts in the other couples' name for them to submit at tax time, then passing on the "savings" of the negative gearing to us. When it comes time to separate, we can either transfer title (subject to stamp duty) or sell at the same time, evening out money afterwards so that we received any gains for the property we lived in/cared for. Essentially benefiting from the property we lived in rather than the one we owned.
What do you think? I understand some peoples' reservations at investing with family, but we have already done it and trust each other. |
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