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Deductible rental expense

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  • #1

    Deductible rental expense

    I want to know if I am renting out my house and rent an apartment to live instead. Can I claim the apartment rental expense against the rental income received from the house (assuming the rent from the house is higher than the apartment rental)?
    Technically I would not have that apartment rental expense if I continue to stay in my house. The apartment rental expense incurred is to derive the rental income from the house ie if there is no apartment rental expense then no house rental income received.
    I hope someone can shred some lights on this.
    Tags: deductibility of rental expense
  • #2
    No. Good thinking though!

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    • #3
      Buy one and rent it out to a friend.
      Get the friend to buy one and rent it out to you.
      All nice & legal like.
      The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

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      • #4
        Originally posted by PC View Post
        Buy one and rent it out to a friend.
        Get the friend to buy one and rent it out to you.
        All nice & legal like.
        +1
        Thank you for the information

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        • #5
          My understanding (not an accountant)

          Your own and family rent is treated the same as your own home mortgage, post tax money.

          You have a rental that costs $200 per week, you earn $200 per week and elsewhere you rent a place for $200 per week. You can't claim that as a $200 per week net loss. The $200 you pay in rent is post-tax.

          If you and your friend rent each other's houses, you have the same again. You both net out to $0 on your rental ownership and pay $200 in post-tax to rent where you live.

          I think there are some exemptions if you need to rent another location for business purposes but I am sure the IRD would look at that. Fringe benefit tax?
          Free online Property Investment Course from iFindProperty, a residential investment property agency.

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          • #6
            Originally posted by PC View Post
            All nice & legal like.
            Associated persons and tainting?

            www.3888444.co.nz
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            • #7
              Originally posted by Keys View Post
              Associated persons and tainting?
              Not to mention headaches and possibly loss of friendship.

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              • #8
                Originally posted by PC View Post
                Buy one and rent it out to a friend.
                Get the friend to buy one and rent it out to you.
                All nice & legal like.
                I came across this some time ago and believe it's legal and above board.
                It's a way to make your mortgage deductible.
                However, ring-fencing might stop that in the future.
                Ignore the rent part - that's a zero sum game.

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