How do I incoporate this deduction tax wise?

Discussion in 'Accounting & Tax' started by Truly Exotic, 24th Jan, 2020.

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  1. Truly Exotic

    Truly Exotic Well-Known Member

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    Got a curve ball , well its a curve ball to me

    my accountant says, if I own 50% of a property, and 100% of the rent goes to the other party, I still have to pay tax on it, and treat it as though im receiving it, which doesnt sound fair, but if its law, its law

    so does that mean the other party has to declare it as income? if so that would mean we (collectively are paying tax on it twice), however, if I pay tax on it, but cant include it as a deduction of some form,
    that means im paying tax on a benefit I will never get

    Whats the rule here?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Unless there is a trust relationship you are essentially gifting your share of the rent to the other party so it would not be income.
     
  3. Truly Exotic

    Truly Exotic Well-Known Member

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    ahh got it, i would assume the normal gifting rules would apply
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Actually it is not necessarily a gift. It depends on your intentions. It might be a loan. if paid directly to the other party they could be deemed to be holding on trust for you too.
     
  5. Trainee

    Trainee Well-Known Member

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    Taxable income and cash receipts are two different things. Eg if you directly deposit dividends on shares you own in another persons account, tax is on you.
     
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  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    You need personal tax advice. If you legally and beneficially own property it doesn't matter who pays or receives. So if your ex wife takes all the income it's still possibly 50% yours .
     
  7. Truly Exotic

    Truly Exotic Well-Known Member

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    according to my accountant, it doesnt matter even if 100% of the rent is paid directly to my ex, i have to treat it like I ve received 50% to me directly
     
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  8. ShireBoy

    ShireBoy Well-Known Member

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    Who's claiming deductions on mortgage interest?
     
  9. Mike A

    Mike A Accountant Business Member

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    Who has the legal interest in the property ?
     
  10. Truly Exotic

    Truly Exotic Well-Known Member

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    no mortgage, if there was I assume it would be a 50/50 spliton mortgage tax wise

    we are on good terms, with eachother, ive been the more difficult one
     
    Last edited: 29th Jan, 2020