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Renting my house to my parents who currently live with me

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Jag | 11 Apr 2013, 02:23 PM Agree 0
I bought a house two years ago which I am paying off. My parents live with me but all the utilities except for rates and water are under their name. We also have a granny flat which is currently unoccupied as I am single and it makes sense (sometimes) to just live in the main house but they occupy the main bedroom etc and I am a bit like a boarder.

I am considering renting the main house to them and saying I live in the granny flat and pay a token allowance for that to my parents.

Can someone tell me if this is possible and where I could get more information on how to make it happen.

  • Josh | 11 Apr 2013, 05:36 PM Agree 0
    Hi Jag,
    That's a bit of a tough one.
    I think it is best to do some sort of deal with them. No way would I go through a real estate for this as it would just be lost money. However, since it is not technically a rental property you cannot claim expenses like rates etc on your tax.

    Its a bit hard when family is involved as its more about emotions then money. I have always been told though you should treat realestate like a business and put aside emotions.
  • Jacqui | 14 Apr 2013, 09:43 AM Agree 0
    My understanding is that as long as you charge them rent you can negitive gear. In fact one of the first examples in the tax pack is someone renting out part of their house.

    So from what I know you don't pay your parents anything for the granny flat, the flat is a proportion of the property which you don't negative gear. So lets say its one third of the property them you charge your parents rent for two thirds of the property and claim the expenses associated with two thirds, including rates, interest and depreciation.

    Pls check out the ATO's info online it will be helpful!

    Good luck
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