splitting negative gearing

Discussion in 'Accounting & Tax' started by Excalibur1, 24th May, 2017.

Join Australia's most dynamic and respected property investment community
  1. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    335
    Location:
    Sydney
    I think the answer to this is "No" but i thought i would ask anyway

    Assuming both you and partner are working in year 1 and both of you own several properties in joint names 50% each.

    Properties are negatively geared (assuming 10k). This means that in previous years that was split 50/50. Both partners reduced their taxable income by 5k each.

    Now one partner has no income in a financial year. Is it possible for the other partner to claim full 100% negative gearing in that financial year?

    Cheers
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,670
    Location:
    Australia wide
    no
     
    Excalibur1 likes this.
  3. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    9,189
    Location:
    Adelaide and Gold Coast
    No , deductions are granted in proportion of title ownership. So unless you change this, deductions will stay the same.

    You could however:
    A) change title into your name, which might have different legal and tax ramifications (and costs!) depending on your state, or
    B) get a time machine and get advice on what name(s) to buy the property in before buying it. If you knew one partner was going to be stopping work you could have planned for that , or put it in a trust and had more flexibility depending on what your circumstances are / were.
     
    Excalibur1 likes this.
  4. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    335
    Location:
    Sydney
    I thought that was the case, but thought i would ask anyway.
    if we change the percentages of ownership to 99% and 1% now, that would trigger CGT?


    Thanks @Terry_w and @D.T.
     
  5. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    One partner with no income this FY can have carried fwd tax losses to use in a future FY when there is income.
     
    Excalibur1 likes this.
  6. Excalibur1

    Excalibur1 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    335
    Location:
    Sydney
  7. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,670
    Location:
    Australia wide
    Yes, but an exemption may apply if you have lived in it.
     
    Excalibur1 likes this.
  8. Paul@PAS

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

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Yes. And stamp duty and finance may need to be refinanced in some cases. But sometimes there are duty and CGT concessions. One of the benefits of retaining tax advice
     
    Excalibur1 likes this.
  9. Paul@PAS

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

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    If you LIVED in it at the time of transfer for duty in some states and
    If you ONCE LIVED in it for CGT
     
    Excalibur1 likes this.