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Renting all of the house but not the back half of the yard.

Discussion in 'General Property Chat' started by Emoi, 8th Jul, 2016.

  1. Emoi

    Emoi Well-Known Member

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    Hi, in another thread I mentioned I was made redundant and was retiring from the workforce for good.
    Just got made redundant, feeling happy but need a financial planner, I think.

    Next stage has been kicked rapidly into gear, we are ready to head on out into the world and we are wanting to rent out the PPOR and half of the block using the 6 year rule.
    There will be a dividing fence between the front half, where the house is and the back half, where the shed with most of our gear will be stored.

    Please tell me that this is allowed, as long as its made clear in the ad and lease that the house on a 300m2 block is for rent. Back half of block and shed not included.
     
  2. Xenia

    Xenia Adelaide Property Manager Business Member

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    Yes it's allowed and common
     
    MTR likes this.
  3. Ed Barton

    Ed Barton Well-Known Member

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    What about the tax implications?

    Is this similar to renting out part of a house? eg the 6 year rule will not apply?
     
    Terry_w likes this.
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes, I was thinking the same thing. 6 year rule only applies to absences - you won't be absent if you retain part possession.

    Tax Tip 135: The 6 year rule and renting part of your property out Tax Tip 135: The 6 year rule and renting part of your property out
     
  5. Emoi

    Emoi Well-Known Member

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    We wont be there, we will be thousands of miles away.
    The tenant will still have all of the house, the car parking, downstairs storage and the majority of the yard and other facilities, just not the back shed at the very back of the block with our car, furniture and tools.

    In your example in the other thread you did say if living there.
    "Example
    Renting out one room of your 2 bedroom unit. The 6 year rule could not apply if you were still living at that unit. Since the unit would become income producing it would be subject to CGT with the cost base now being the value at the date it was first rented. Half the property would be subject to CGT and half would be exempt."
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    But you will still have possession of part of the property.
     
    legallyblonde likes this.
  7. Ed Barton

    Ed Barton Well-Known Member

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    Terry is correct. You are wrong.
     
  8. Emoi

    Emoi Well-Known Member

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    So surely it'll just be the tin shed and the small parcel of land that wont be able to use the six year rule.

    The house, the car parking, downstairs storage and the majority of the yard and other facilities which are in the tenants possession will be able to use the 6 year ruling.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    legallyblonde likes this.
  10. dabbler

    dabbler Well-Known Member

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    If I were you, I would lease them the whole place but you can say the shed will be locked and tell them why, this way they use the whole block, maintain it etc as well.

    I kept part of a garage on one rental, there is a bit of a trust thing there as well, but I gave an undertaking that I would not enter any part of the property without the ok. I basically would not need to except emergency in my case, and items were very heavy and not worth much.

    If you are going to lose rent by cutting rear off, maybe same thing to rent out someone elses shed/garage/storage.