Hi all,
I am a home owner and am lucky enough to own 2 investment properties (and when I say own, natuarally I mean co-own with the bank). I am very particular that I keep my tax affairs in order and all my tenants claim rent allowance and are registered with the tenency board.
However, I am aware of somebody who has done the following and I'm wondering what's the liklihood of it ever being a problem for him.
He was living at home with his parents and he bought a small house and claimed the FTB grant and naturally paid no SD but he immediately rented it out and never lived there himself. He was collecting the rent in cash every month for about 3 years and then he sold it and made a nice little profit out of it. He still continued live at home with his parents.
In the meantime his girlfriend bought her own apartment (again claiming the FTB grant and no stamp duty) and after a while he moved into it with her.
Then they bought a house together, moved into it and immediately rented out her apartment. My understanding is that because the apartment was bought less than 5 years ago that they are liable for SD clawback from the day they received the first rent payment. However, true to form, they are ignoring this and again the tenants they have are paying cash and they are not delaring any of it.
My own view on this is that it simply is not worth it because with the right gearing on investment properties you can really keep your tax bill low. However, I never hear of people being caught for this type of thing and was just wondering what peoples views are on it. Does anybody know if revenue seek out these people and what happens to them if they get caught?
Cheers,
mw
I am a home owner and am lucky enough to own 2 investment properties (and when I say own, natuarally I mean co-own with the bank). I am very particular that I keep my tax affairs in order and all my tenants claim rent allowance and are registered with the tenency board.
However, I am aware of somebody who has done the following and I'm wondering what's the liklihood of it ever being a problem for him.
He was living at home with his parents and he bought a small house and claimed the FTB grant and naturally paid no SD but he immediately rented it out and never lived there himself. He was collecting the rent in cash every month for about 3 years and then he sold it and made a nice little profit out of it. He still continued live at home with his parents.
In the meantime his girlfriend bought her own apartment (again claiming the FTB grant and no stamp duty) and after a while he moved into it with her.
Then they bought a house together, moved into it and immediately rented out her apartment. My understanding is that because the apartment was bought less than 5 years ago that they are liable for SD clawback from the day they received the first rent payment. However, true to form, they are ignoring this and again the tenants they have are paying cash and they are not delaring any of it.
My own view on this is that it simply is not worth it because with the right gearing on investment properties you can really keep your tax bill low. However, I never hear of people being caught for this type of thing and was just wondering what peoples views are on it. Does anybody know if revenue seek out these people and what happens to them if they get caught?
Cheers,
mw