A while ago I read some info on running IPs as a business. At what point, or why would it be an advantage, or, is it a dis advantage. Does it matter if you are quite involved with the IPs, doing repairs, lot of travel etc. I have often thought we should be invoicing for work & also should be doing work for others on IPs. Also, if you have PAYG income as well, would this matter.
Yes, of course. If spouses can loan each other money they should be able too invoice each other, or other entities. @Terry_w running as a business would have different aspects I expect, such as with travel.
Spouses can contract with each other and with telated entities whether a business or not. Not sure how travel would differ except that if you are in the business of property travel costs pre purchase may be dedeductible.
As would all the tools, vehicle and other related items required to run the business. There must be a point to running an IP business. Pros and cons.
Cars under $20k could possibly be claimed if running a business but tools etc could possibly be claimes as an investor too.
I've often thought about this as well. One of my IP's sits in a discretionary trust. The structure I have often thought about was to set up a business involved in the repair and maintenance of properties (as y-man suggested above, a handyman business). I, as an employee of that business, would do the work on the IP and then invoice the trustee of the discretionary trust for services performed. Anyway, this has never progressed from a mere thought bubble in my head as I have a full time job that hardly gives me time to scratch myself so the last thing I want to do is spend any spare time I have performing repairs and maintenance on my IP--would rather spend my spare time hanging out with my family and just pay someone to do the work on my IP.
If you invoice a trust you would be diverting income from it to yourself. Usually you would want to do the opposite so as to benefit from the streaming ability of trusts.
Get advice would be my tip. Wont cost much as the issue is very simple. Rental income is considered passive investment income. A maintenance business would be a separate activity (business income) and likely offsetting one v the other would not work (a variety of factors but losses springs to mind as one). Biggest one though is personal services income. Then there is Part IVA. Unless there is a tax benefit why do it ??? Thats where Part IVA applies. Fail. One of biggest issues with handyman businesses is making profit is a challenge. Invoicing is one thing. Costs such a materials, quotes and travel erode profit. I have seen one VERY successful one in 20 years and around 15 others that arent. The successful one was a rare case and he stitched up a massive franchise operation nationwide. 600 premises. He branched out into landscape, cleaning and even construction and waste removal so he kept all competition away. Sold it for $m's to a major services company a month before the franchise went belly up.
