I have just purchased my first property and am currently renting it out, planning to move in within 12 months. When I move in I was wondering tax wise if there are any benefits from renting out a room in my place to a tennant? It is a 2 bdr villa, say receiving $100 p/w rent from a tennant from one room, how much of my interest payments can I claim as a tax deduction? any other things?
You can claim a corresponding amount of the cost of the place – I think it is calculated as a ratio of the space rented vs total floor space.
See your accountant as this may lose you part of your CGT exemption.
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
If it were me, i would not claim anything as that money then is incorporated in your overall income which in some cases may take you into the next tax bracket.
Accept cash and pay more of your morguage.. That way it reduces your intrest of your PPOR and becomes negative.
Cheers
Except of course that that would be tax fraud…..
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
So if it’s a 2 bdr villa and 1 bdr is rented out, living/dining, kitchen and bathroom is shared…what would be the rough percentage i could claim on my interest repayment as a tax deduction?
Hi Uforia,
You could try a home stay situation, where you rent out a room to international students for about $150 per week, depending on the intitution which provides the service. In SA, this is tax free for a max of 3 students. If you have the time, you could provide full board home stay, we did this for 2 years with a couple of international students and it was certainly an experience. they pay $200 per week each and you provide them with 3 meals per day + use of all facilities. And its all tax free!!!! legallyWe buy properties in all conditions. Can offer Immediate Cash Settlements, No Real Estate Agents Required
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phone 0412 437 582According to the Tax Payer’s guide (published every year), there is no need to claim rent received from flatmates etc as it is not taxable income. A friend also told me the ATO also said the same thing to her.
But you could declare the income and then claim a perscentage of the costs. If it was a two bedroom place, and one room was rented out, I would suggest you could claim half of everything.
But beware. This could make you lose the CGT exemption. So saving a few hundered dollars now, could cost you thousands later on.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Mortgage Hunter,
How many people do you know that you that have claimed on their overall income when they have a flatout?
Stop wearing your business man hat and put your ‘real world’ hat on…
You silly sosage![inlove]
Cheers
Hi,
Per ATO website:
Rental and other rental related income is the full amount of rent and associated payments that you receive, or become entitled to, when you rent out your property – whether it is paid to you or your agent. You must include the full amount of rent you earn in your tax return.This seems pretty cut and dry to me. As for expenses, you would then need to apportion based on floor space.
Renting out a room in your PPOR will also most liekly have an impact on your ability to claim the full CGT discount.
It would be sensible to discuss this with your accountant prior to making any decision.
Regards,
Steve McKnight
**********
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When you guys talk about CGT exepmtion, what do u mean? Considering I will be renting out my place 100% initally for 10months and then move in planning to possibly rent out one room while I live there….
Capital exemption – any capital gains or losses from the sale of the dwelling in which you live will be disregarded if it is owned by you and was used as your main residence during the ownership period.
If you renting out 100% initially, when you sell your house you would need to pay CGT for the period of 10mths but you’ll be entitle 50% discount on the CGT assumed you hold more than 12 mths.
if you plan to move in and partially rented out: Only a partial exemption is available if par of your residence is used for income producing purposes. for example you rent 15% of the floor space of your residence to a boarder you will not be able to claim the exemption for that part. ( you will however be able to claim 15% of the occupancy cost – interest, rates power etc as a deduction against income).
If i rent out one room for additional one year then move in soley without renting out, and plan to stay there say 5 years. I would only need to pay CGT on the period it was rented out 100% and a small percentage for when i was renting out one room? Sorry about all the questions just trying to get my head around it all and make sure i’m not missing anything important.
Originally posted by colbert1982:Mortgage Hunter,
How many people do you know that you that have claimed on their overall income when they have a flatout?
Stop wearing your business man hat and put your ‘real world’ hat on…
You silly sosage![inlove]
Cheers
I get your point, however not everyone reading your advice would be aware that you are actually suggesting that they break the law.
Is Ok for you as you are anonymous but the owners of the site aren’t.
All the best
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Quote:Originally posted by Terryw:According to the Tax Payer’s guide (published every year), there is no need to claim rent received from flatmates etc as it is not taxable income. A friend also told me the ATO also said the same thing to her.
Terry,
I think this refers to rent from flatmates where you are the person on the lease and paying the rent each week! Therefore the rent is simply passing from them through you to the landlord.
I belive it does not apply to landlords.
Wish it did – I would move into my student rental and make $450 pw tax free from the other four tenants [biggrin]
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Mr Marks,
As long as we are on the same wave length (so to speak)
I highly doubt the tax office if going to bother.. never heard of it in the past and i hear your point about the owners of this site. Wonderful People. Stevo actually took the time out of his busy day to peronally email me.. Great bloke…
Hopefuly everyone here is learning as much as i am from spunks like you…
Cheers
Quote:Originally posted by colbert1982:Mr Marks,
It is Macks.
But don’t worry, even the Governor General spelt it Marks once!
Cheers,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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