Browse Forums Real Estate 1 May 16, 2011 11:30 am My primary place of residence is a 3 bedroom home. As living costs rise, and if interest rates go up further it might be nice to have one or even both of the spare bedrooms 'rented' or 'boarded' out to bring in some extra money. I am having trouble finding any rock solid information on the legalities and tax implications of doing so. If I was to 'rent' out both rooms, I wil bring in approximately $1020 per month. Would i need to declare this as taxable income? Would this trigger capital gain on my property? Would this mean that I could claim partial deductions on the costs of improving the property? I am getting mixed advice from people who have never been in the situation. Any advice, or links to helpful reading would be hugely appreciated. Rob Re: 'renting' out rooms in my PPOR, and the tax implications 2May 16, 2011 1:14 pm I've wondered about this too and I came to the conclusion this is why you almost never see rooms for rent/board via estate agents - almost everyone does it off the books. The unwritten law seems to be that for boarders there is no bond and it's just paid in cash every week. Otherwise you'd almost certainly have to pay income tax on the board and although you could probably claim certain expenses it starts to make the whole thing seem less worthwhile. Re: 'renting' out rooms in my PPOR, and the tax implications 3May 16, 2011 2:05 pm Legally? yes you should be declaring it as an income, if that's the case you ought to pay tax on it. But one plus side is that you can claim the expenses for those 2 rooms that offset the money u'll receive. (bills, maintainance etc) (so if it's a 3 room house, split 2/3) And if you wanted to claim the depreciation on things that the renters will be using. However, don't think it'd make too much difference. On the other side? - like Mozzie mentioned easiest way is to keep it under the radar, and get them to pay you cash, and split bills yada yada. Everyone does it. In the end - your decision what you think is morally right We've had the offer of a short term tenant whilst waiting for CDC/DA home approval and demolition for our knock down rebuild. It would achieve a pretty low rent as it's… 0 13743 the exemption applies only to your principal place of residence - so you must live in it. The 200 days is continuous. You also have to apply for the exemption. 2 13312 If it's your primary residence then there is no tax deductions to be made. 4 125240 |