recently had a discussion with a fellow colleague and they were telling me about a client who has a service trust which charges management fees to other associated trusts (all holding properties) for management fees, etc. my understanding not a large business about 4 or 5 properties with one in each trust. be very careful of such arrangements as the recent PBKQ case may well deny such a deduction. questions you need to ask are why is such an arrangement in place. if you have commercial premises with staff in such a service trust and charging that to your professional business i understand. but managing your own properties in other trusts and charging service fees across ? you may well find under PBKQ it isnt deductible. and thats before even considering part iva
Yes and certain real estate licences may be needed too if different entities other than the owners are collecting rent etc
Ditto paying a spouse to "manage" your properties or do records etc may not deductible. Rent is considered a passive return for ownership. You dont necessarily incur costs for admin etc as its not a business. Its an investment. And likely a Part IVA scheme to shift income from a higher income earner to a lower (no) income earner spouse. Also Part IVA scheme perhaps ? The Commissioner can also cancel the tax benefit in any year - No time limit. One issue surrounding the recent depreciation changes is that company ownership is excluded. Putting aside the CGT issue of companies a company may be a excellent vehicle for some property ownership. But it comes with caution. Many believe a company is a business. Its not. Its a structure. A legal existence separate to that of the owners of the company. I fear some may soon see merits of companies and mistakenly think they have a business when ta company may not be a property business. And not likely to be small business either (attracting the 27.5% tax rate). All reason why a simple question to a property savvy tax adviser can be so valuable. What seems complex to taxpayers can be quite simple, fast and perhaps just on the fly advice without further costs.