Okay, back to letting out rooms for students . . . it sounds like the real issue is whether to declare it as income or treat it as a 'share accomodation' private arrangement.
 
If I do then I will lose on:
CGT
declaring income to centrelink

BUT it means I can get:
a tenancy agreement
tax deductions on a percentage of all building maintenance, rates, utilities, cleaning etc
depreciation
honesty to govt depts

CGT is an important issue but I would be hoping to hold the property for as long as possible to build a portfolio.
I'm not sure how declaring/not declaring affects my home insurance policy. Would I lose out on a claim if they discovered I was renting without declaring this?

Does anyone have advice on the pros and cons of declaring rental income?

cheers
md