Is it a PPoR or IP? #parentals

My parents are living in my PPoR and paying me rent in cash for one of the rooms.

1.) Is my property still deemed as my PPoR? or is it now deemed an IP?

2.) Can my parents claim Rental Assistance if so?

3.) Is it better to declare this cash as an income to show the banks I can service a potential Investment Property in the future?

... or will this be a bad move as I will push my taxable income bracket over 90K?

 

1. This poster has asked a similar question:
Is my property a PPOR or IP?

2. yes

3. If it is income then you are legally required to declare it.

 

Thanks for the reply. Much Appreciated.

I did not get a clear decision from the mentioned thread and my conditions are different. I am living in the property with my parents and they are also paying rent. Is this still classified as my PPoR? If so, will the money generated be considered by the bank as other income so I can obtain a IP in the future? (considering how tight lending has become).

 

Did you borrow to buy this property?

Do you know this can affect your cg exemption?

 

I borrowed to buy this property and I will live in it.

 

If you are living in it then it is probably your main residence.

But you are renting out rooms and lenders will generally not use this income for servicing calculations.

 

Are you sure the loss of cg exemption is worth it?

 

Might help to read this
Renting out part or all of your home

 

1. It is both. Main residence with part of it used for income production. Capital gains tax may trigger. Proportioned expenses can be claimed but in the end may not be worth the hassle.

2. Centrelink site says they have to pay a minimum rent to be eligible for rent assistance. Even if they were getting full rent assistance, it may not be beneficial to pay capital gains tax.

3. I doubt Banks will consider this as additional income. Best to keep it simple, use the extra cash flow to pay off the mortgage sooner.

From ATO:
"Note that payments from a family member for board or lodging are considered to be domestic arrangements and are not rental income. In these situations, you also can't claim income tax deductions."

 

I would seek personal tax advice. If your parents are paying for board its different to rent. If the arrangement is a short term situation its likely private. If its longer term and there are some specific issues it can also be found private eg where they may have provided some of the funds for the acquisition for example. What does the "rent" pay for and what do they use ? The ATO can also attack the arrangement if the parents provide services eg laundry, cleaning, child care etc. They will consider the arrangement private as no arms length tenant would do this !! This is a area of high focus by the ATO and reckless claims could expose some problems now and long into the future. Better to get it right.

One of the concerns that I see is some only want to declare "rent" when they can maximise a loss but argue its not rent but board when its positive income. Each position may be equally incorrect.