RentVesting Brokers?

Hello, for decades now I have been aware of the idea of RentVesting as it's now called. Where one entity buys a property for a second entity to live in and the second entity buys a property for the first to live in. Therefore getting the property each wants to live in for as long as they choose whilst being able to claim all expenses etc that go with investment property ownership.

So does anyone out there know of any brokerage available to set up interested parties in a similar financial position.

 

Its a little better than buying with someone.

not much better.

you still dont get to own the property you want to live in.

 

Rentvesting is just buying a property to rent out, while you rent elsewhere. It's not really that complicated, and you don't need a second party to do it....just a good PM.

 

I've heard of plastic surgeons and the likes buying neighbouring properties in such an arrangement. Definitely smells dodgy

 

That isnt rent vesting actually. It two parties mutually entering into a scheme that produces a tax benefit. Broker is a promoter? If the full facts were put to the ATO I have serious doubts about the viability of a favourable private ruling. And the main residence exemption could also be compromised as neither intends to commence to reside. Its a temporary residence.

Rentvesting is the slang term that describes a person who buys a property that is initially their home before they move out and rent it and utilise the 6 year absence rule. Thats it. For two parties to mutually commence such arrangemnets seems a Part IVA concern. I would EXPECT a ruling that supports the full disclosure of the arrangements being promoted and entered into

 

Is it illegal?

Say if I buy a house on the same street, but my brother buy the house opposite to the house.
We both rent it out to each other and it is managed by RE agent - everything seems above board.

What seems dodgy about that?

 

Its not illegal to breach tax law. Illegal means it prohibited by law. Its merely a breach of the tax law views in Part IVA. It leaves you exposed to major problems.

Say if I buy a house on the same street, but my brother buy the house opposite to the house.
We both rent it out to each other and it is managed by RE agent - everything seems above board.

What seems dodgy about that?

Part IVA may cancel the main residence exemption and any future time and also see the arrangement as a scheme where the predominant purpose is to produce a tax benefit. The Commissioner could cancel the main residence exemption AND the net tax losses and there is no time limit to evasion. And penalties and then interest.
As a tax professional I would argue that unless you possess a tax ruling based on complete disclosure of the whole arrangement by both parties you are walking blind into a minefield.

Ask yourself - How likely do you believe it will be that the Commissioner says they see no issue and
1. Part IVA wont apply
2. The main residence exemption will apply to each taxpayer and
3. The net loss is allowed for negative gearing

 

i know parents who brought a place close by and let kids and relatives live there at minimal cost (far below market value) and i'm not sure but I bet they got a big tax deduction out of it.. not dodgy? wonder if taxman ever follows up on landlords leasing below market value...

re rentvesting - viable if you dont have kids and rentals are cheap but need an exit as rental prices can swing.. best to rentvest if you can get one of these primo private rentals and an owner that never sells .. i'm still looking for my sugar daddy landlord

 

I know plenty of ethnic background Australian do just that. It is part of their culture to live closed to each other.

Good luck with giving fines to a whole tribes of related people.

 

One day they just get a notice from the ATO that they owe money. Good luck fighting it.

 

I haven't heard anything from that Ethic group about ATO asking them they owe money.
Money and ATO is one of their topic they talk about alot.