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Allowable costs on renting out room in PPOR

Discussion in 'Accounting & Tax' started by James Bond, 25th Nov, 2015.

  1. James Bond

    James Bond Well-Known Member

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    Hi, we have started renting out a self-contained room with ensuite in our PPOR. It has its own entrance but is an integral part of the house. We have it on a few websites and are getting a good occupancy rate.

    For my records for the end of year tax return, what costs can I claim and how do I go about apportioning them as a % of total applicable to the PPOR? I presume it is by floor area %, but do I include garages/decks/balconies in the total floor area or not?

    Can I claim - % rates, %water, gas, elec, % insurance etc? (there is no mortgage)

    Presume I can depreciate?

    Thanks for any advice

    JB
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    I presume you understand that you will lose some of your PPOR's CGT-free status by doing this?

    Yes - floor area

    If it comes under the footprint of the house roof I would, but not if it was say, some carport to the side.

    If the rented part has decks and balconies - yes, otherwise I personally would not include them in the calculation.

    Yes

    Yes

    But get your own tax accounting advice.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You should probably apportion based on floor area, but excluding any area that the tenant is excluded from.

    You can claim any expense associated with the production of that rent.

    Keep in mind your house is now subject to CGT and your cost base will be reset at market value as of the date it first became income producing.
     
  4. James Bond

    James Bond Well-Known Member

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    Thanks, well aware of the CGT matter. An earlier post by Terryw persuaded me that this is not likely to be as big a bill as I originally imagined. The actual % floor area rented is probably only 5.29% of the total.

    JB
     
  5. joel

    joel Well-Known Member

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    Don't forget to include any common areas (kitchen maybe?)
     
  6. James Bond

    James Bond Well-Known Member

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    Melbourne
    No common areas, but thanks. The room is completely self-contained with its own entrance. We built it for an elderly parent's visits who sadly is no longer with us.

    JB