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Selling Rental to LTC

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  • Selling Rental to LTC

    Have a situation. Have 2 properties. One owner occupied and one rental both on personal name. Converted the owner occupied in to a rental and sold both the properties to LTC at market price. Bought a third one for owner occupied.

    Will this be ok with IRD when we claim interest for the two rental at a higer cost.

  • #2
    Originally posted by saleemn View Post
    Have a situation. Have 2 properties. One owner occupied and one rental both on personal name. Converted the owner occupied in to a rental and sold both the properties to LTC at market price. Bought a third one for owner occupied.

    Will this be ok with IRD when we claim interest for the two rental at a higer cost.
    Claiming the previously owner occupied home (now converted to rental) at the higher cost in the LTC is explicitly accepted by the IRD. Restructuring an existing rental into an LTC at a higher cost is less clear. It's most likely a case of looking at the whole situation and the reasons behind the transfer.

    I don't expect you'd have any trouble for this transaction, given the stated facts. But a more conservative accountant may give a different answer.
    AAT Accounting Services - Property Specialist - [email protected]
    Fixed price fees and quick knowledgeable service for property investors & traders!

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    • #3
      Hi Saleemn,

      What is your commercial reason for selling the rental in your personal name to the LTC?

      If your only reason is tax, then you could have an issue.

      So spend some time, and document it carefully!

      Ross
      Book a free chat here
      Ross Barnett - Property Accountant

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      • #4
        Thanks guys. These are all long terms rentals and when moved to a bigger property it was suggstd that to keep the whole thing tidy it was better to have a diffrerent structure and keep it under LTC. What other commercail reason we can attribute? Any suggestions.

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        • #5
          The 'tidiness' one is what I expected was the underlying issue. It's not that you're simply moving a rental into the LTC, you're moving your personal home into the LTC, and shifting your other rental along with it.
          AAT Accounting Services - Property Specialist - [email protected]
          Fixed price fees and quick knowledgeable service for property investors & traders!

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