Rent my only property out...

[Korg]

Hi guys,

We are thinking to rent our only property out and rent an apartment in city close to work in order to save trave time and expenses.

Question is if we rent our property out and rent an apartment, do we need to setup LAQC or other proper structure to claim the expenses from IRD again my salary?

Don't know anything about it, just wanna make our first step to property investment. Please help

[The_Dog]

No problems here.

Only problems if you try to rent your property to yourself and claim tax.

The Dog

[cube]

If you simply 'rent your property' out, there may be problems with the deductability of interest, because the purpose of the loan for for a private residence, not for an investment property.

You may need to 'sell' you house (at curent valuation) to an LAQC (or Trust), using a new loan to pay off the old one.

I would suggest a chat with an accountant who is well versed in property transactions.

Also, the rules around LAQCs are under review (amongst several other areas of tax benefits for investment property), so keeping up to date with the news here on PT and in the press is important at the moment.

The budget is on Thursday - maybe there will be an announcement then?

cube

[Scott Miller]

I agree with cube, at this stage a LAQC is the structure you're after.

[Korg]

Thanks guys,
if the property is simply rented out without transfered under a LAQC, is it the only problem with the deductability of interest?.

I am confusing at the moment if just simply rent and claim loss again salary, does it have to set up a LAQC company? thanks

[Josko]

if the property is simply rented out without transfered under a LAQC, is it the only problem with the deductability of interest?.

Yes, see your accountant.

I am confusing at the moment if just simply rent and claim loss again salary, does it have to set up a LAQC company? thanks

No, you can claim losses against your Income without having an LAQC.

If you are still unsure, ask away...

[Scott Miller]

No, you can claim losses against your Income without having an LAQC.

Josko is right, although without an LAQC there can be no distribution share of the taxability advantages.
This may have no effect on your personal situation if:
1. You and your partner are on similar incomes.
2. You don't have a partner.

[xris]

hello korg,

Don't get side tracked by the laqc issue. although possibly the best option for you, it may not be. 'Laqc', like 'assigning contracts', 'Garth' and 'corporate trustee' is one of those buzz words people like to use.

Far more important is for you to understand the concept and the reasons behind the tax issues when letting your personal home.

Once you have understood this most of your questions should have been answered.

There are numerous threads on this topic here.

The details of any given situation may (or usually may not) be a little complicated, but the concept really is quite simple, despite what some people might have you believe.

xris