Hi Everyone,
If my boyfriend and i were to rent out the 2 spare bedrooms in our house (PPOR), what things do we need to consider e.g tax implications, residential tenancies act, CGT because it’ll essentially be our PPOR as well as an investment property at the same time so which rules do we follow, those for a PPOR or those for an IP hence things like CGT etc would come into play??? [?]
Any advice would be most appreciated.
Regards,
Kim
Kim, I think it depends on whether or not you claim the interest as a tax deduction. I would ask this question of your accountant, and work out which way to do it based on what they say.
Cheers
MelHi Kimtruong81,
This probably gonna sound like the wrong advice, but if you dont tell anyone, and your living there at the same time, it wont really hurt, if you take cash payments for letting them rent a room. I mean many people do private rentals, in letting peole rent a room on there PPOR, as long as you dont tell anyone, i wouldnt be to worried.
Sorry this might be the wrong advice, but c’mon many peole do this and dont say anything.
Cheers,
sisThat’s true SIS – but I think there is a way to make it tax effective. It won’t hurt to ask the accountant’s advice.
suggest that you’re thinking of renting out the room, and ask what the tax situation would be.
Cheers
MelHi there,
I hate to take the moral high-ground here viz not telling the IRD but just because everyone’s doing it doesn’t make it right.
It’s been my experience that:
1. That stuff always catches up with you
2. I’m still broke.Dave
Your accountant is the best person to talk to. he/she be able to working the portion that you rent it out. If the house have 3br and your rented out 2 bedrooms and you share everything in the house ie. kitchen, toilet….then you be able to claim 2/3 for investment like interest rate, water rate, council rate and so for.
Warm Regards
ChanDollars
[Keep going, you’re nearly reach the end of financial freedom]Hi Kim,
I have been renting out rooms for years. Both in my PPOR and IP’s. I never used to tell the tax man about income from PPOR. I do now, but only because I want to prove income to keep buying IP’s.
I do have tailor made leases, ID forms and room reports sheets if you would like them.
If you like you can email me on [email protected]
Mick
My property is a dual occupancy 2 bdrm + 1 bdrm, seperatley metered etc but all under the same roof. As I was renting out the 2 bdrm while I was in the 1 bdrm as my PPOR I was able to claim 70% on such things as land tax and rates. 70% was considered to be the ammount of the property being rented, going off the house plans. I’m not there atm (and probably won’t be for a while) so should be able to claim more for those things now.
are there any tax implications or legal issues if the people are paying “board” to you instead of “rent”?
It all depends if the person renting wants to claim an allowance for their rent.
I had a Uni student renting a room who wanted receipts to prove his rental expense. Therefore I had to declare the income.
At the same time I had a Self employed Carpenter in the other room who was paying cash, so I didn’t bother declaring that portion.
Darren
Originally posted by ryanmel:are there any tax implications or legal issues if the people are paying “board” to you instead of “rent”?
The main difference is that people paying board do not fall under the residential tenancy act, which give them very little rights. In this situation the landlord becomes GOD!
Mick
Hi Everyone,
Thanks for all the advice…..you’re right in that it is something i’d have to discuss in more detail with an accountant to see which method would be the most beneficial but everyones comments have helped me out alot in that i’ve got some serious thinking to do
[
]Cheers,
Kim
One last question, would i definitely lose the 6 year CGT exemption if i were to declare the rent money as income??
My understanding is that you lose the CGT exemption equivalent to the portion you claim as income producing – in your example 50% will be CGT exempt as per the PPOR rules and 50% wouldn’t be as per the investment property rules.
Kim
I am not sure on the asnwer to this, but am under the impression that if you were to rent out part of the property (eg. 50%) then that part would lose the CGT exemption.
Melanie
I am not exactly sure but if that was the case, maybe Kim could stop renting out 50% of the property at some stage and then the 6 year rule would start again. Kim, please let us know what you accountant suggests.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
We don’t actually have an accountant yet[
]….still trying to find a good one around Adelaide but as soon as we do, i’ll post what he/she says on this issue.Kim
]
]….still trying to find a good one around Adelaide but as soon as we do, i’ll post what he/she says on this issue.You must be logged in to reply to this topic. If you don't have an account, you can register here.
