Renting out part of PPOR via Air BnB

Discussion in 'Accounting & Tax' started by Jamie Moore, 20th Mar, 2017.

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  1. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hey tax gurus

    I'm not used to posting questions :)

    It relates to a mix use home - owners live upstairs and rent out two units downstairs via Air BnB.

    Lets assume living areas are the same (150m2 upstairs and 150m2 downstairs).

    Ownership is 99/1 to wife/husband.

    Would borrowers be able to claim half of the interest on the home loan given that half of the home is rented out at commercial rates?

    I assume any expenses related to the units would be deductible as per a normal IP?

    Would future CGT simply be apportioned at 50% of capital gain?

    Is there anything else to consider?

    Cheers

    Jamie
     
  2. thatbum

    thatbum Well-Known Member

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    Land tax and local council planning laws.

    But I think the rest of what you had sounds about right off the top of my head.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Thanks for the response.

    The property is in QLD - so land tax shouldn't be an issue (the land, once apportioned, wouldn't be worth over $600k which seems to the threshold for land tax).

    From the googling I've done - there doesn't seem to be any council regulation/policies in place regarding short term holiday rentals (touch wood). That might change though.

    Cheers

    Jamie
     
  4. Terry_w

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

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    Possible Cost base rest to market value at date first income producing
     
  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Cheers Terry - do you mind elaborating?

    Jamie
     
  6. Terry_w

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

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    From memory s 118-192 itaa97 makes the cost based reset to the market value at date it is first income producing. So if you bought it for 100k and rented part out when valued at 500k the cgt will be based in 500k.

    Then you have to apportioned based on proportion of property rented out. If you rent out 25% constantly then 25% will be subject to cgt when sell based on the $500k cost base
     
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  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Ahhh ok cool - in this instance it would be rented out from settlement.

    Cheers

    Jamie
     
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  8. ellejay

    ellejay Well-Known Member

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    I'm looking at a similar scenario in NSW. Would be interested to hear how you go Jamie
     
  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    There is a no specific rule. A taxpayer is required under self-assessment to determine a reasonable basis of apportionment. In the OP Jamie, there could be two different basic outcomes.

    1. 50% where the tenants have a right to use the yard area or
    2. Less than 50% where the tenants have no right of use.
     
    Tim & Chrissy likes this.

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