Do I have to declare rent/board on my owner occupied property if I dont declare any tax deductions?

Hi jacqui,

Unfortunately, its not as simple as choosing not to claim the expenses, and therefore not having to declare the income. from the point of view of the tax office you are using your home to produce income, and its taxable (& you are entitled to claim your expenses against that income).

Declaring the rent isnt that big a deal, because your expenses will most probably be more than the rent, so you’d get a tax advantage from declaring it. The problem is that if/when you sell the property, you will not get the full main residence exemption for capital gains tax. So if your renting out 20% of your house, then 20% will be subject to capital gains tax when you sell. The tax department perceives this kind of arrangement to include shared common areas… that is, you might only be renting out one room, but you also loose the exemption for half all the common areas. So if there’s only two of you living there, then that percentage will be pretty close to 50%.

There’s an example here:
http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm
bottom of the page.

That said… whilst of course I cant condone it, heaps of people do sublet a room to help with their mortgage and dont declare the income, its almost “unaustralian” not to. its probably not something to worry about if your being paid cash and your tennant is not collecting rent assistance from centrelink. (data matching)