This is a bit of a tricky situation, so I thought to get some opinions on it.
Some months ago I moved into a house as a PPOR and also received the FHOG. The original plan was simple: stay in it for 6 months and then rent it out. I was loving life in a house all by myself.
But recently, some friends of a colleague have expressed interest in renting a house but need to do it almost immediately. Since I need a tenant sometime down the track I've decided to give it some thought. This complicates matters however because I have not stayed in this home for 6 months as of yet.
They are potentially good tenants and will rent for a significant length of time. The latter point would have both pros and cons.
I considered letting them move in and stay free of charge until my 6 months are up, and then start charging rent as per normal thereafter. But having said that I would need to get an agent, do credit checks, get feedback, and get the legal documents signed, otherwise it could be a mess if these supposed 'friends' turned out to be squatters in my house. However, I fear that once all these documents are signed the property is immediately considered an IP and I'd lose the FHOG, plus risk the fines and other issues.
So the key question is, if I continue to stay in my house as a PPOR and have a few friends boarding for free, do I still get to keep the FHOG? Are there any other 'issues' associated with this scenario? On the other hand, if they did indeed pay rent/ expenses for utilities etc, do I similarly forfeit the FHOG? I understand that if I'm collecting rent I can claim it against interest on the loan, but there might be implications for CGT if I subsequently decide to sell the property.
Hope to hear some good advice from people in the know.
There is no need to air your dirty laundry here…….. Renting out rooms has CGT consequences as well…… I cannot say what to do here but I know a lot of people that will put there hand up for that free rent…..
Leigh Birch
http://www.birchcorp.com.aunumber 8 wrote:There is no need to air your dirty laundry here…….. Renting out rooms has CGT consequences as well…… I cannot say what to do here but I know a lot of people that will put there hand up for that free rent…..
Leigh Birch
http://www.birchcorp.com.auThanks for your response. Deciding to post questions on this issue was a carefully considered move. I've received helpful and relevant responses at this forum before and thought it'd be no harm asking again. I'm almost doing this as a favour for someone (something which I like to do, fortunately, or unfortunately), but having said that I want to ensure that it isn't to my detriment.
I am glad we are on the same page. Cheers
It's perfectly legitimate to accept contributions to household expenses and not declare them, provided 1) you're not doing it primarily for profit (eg if this was your primary source of income), and 2) you don't claim the expenses they're helping pay, such as mortgage interest. The contributions are not income; it's just that you pay all the household expenses, and then get your fellow householders to contribute a share to you.
The ATO is not interested in non-commercial private and domestic relationships.This can happen where somebody takes in a lodger to help share "running expenses".
http://www.ato.gov.au/youth/content.asp?doc=/content/66884.htm
propertunity wrote:It's perfectly legitimate to accept contributions to household expenses and not declare them, provided 1) you're not doing it primarily for profit (eg if this was your primary source of income), and 2) you don't claim the expenses they're helping pay, such as mortgage interest. The contributions are not income; it's just that you pay all the household expenses, and then get your fellow householders to contribute a share to you.The ATO is not interested in non-commercial private and domestic relationships.This can happen where somebody takes in a lodger to help share "running expenses".
http://www.ato.gov.au/youth/content.asp?doc=/content/66884.htm
Thanks for the advise. The greater concern I had was with whether this move would cause me to lose the FHOG (or at least be liable to be fined). I asked a friend today who did state it would probably be ok to actually rent out part of the house as long as I were still staying there myself for the required amount of time.
While I've yet to contact the SRO to get confirmation of this, I looked up information concerning the FHOG again this morning and saw no mention in it that the house couldn't be rented out. One of the key factors was simply that the applicant had to stay in the house as a PPOR for the required amount of time.
Nevertheless I've been in touch with the prospective tenants today and they may have found another place to rent. That puts the questions to rest I guess.
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