Apportioning Shared Use of Home

I came across a NTAA practitioner article that cites the ATO using a example of how to reasonably apportion shared use of a home that also earns some rent. This question is common for a sharehouses etc. The owner seeks to claim a deduction for the ownership costs and seeks guidance on how to calcualte this. I couldnt find the ATO example so have cited the NTAA source instead.

The example is that part of the home is occupied by the owner. Part is rented. Jane has a 2Br+2Ba unit. Lets assume no garage spaces. Jane has 1xBr and 1Ba and the tenant uses the other along with visitors. The tenant has access to all common areas and even has free wi-fi use. Jane can claim 50% of occupancy utilities and wi-fi (water, elec, gas, teleph, wifi etc). How much of other costs can she claim ?

Jane's tenant occupied the room for 150days in the first year.

Unit is 80m2 total
Tenant room is 10m2
Common areas are 50m2

Two calculations are :

a. Room occupancy
(10/80 x 150/365) x 100 = 5.13%
b. Common Areas
((50/80) x(150/365))x50%) x 100% = 12.84%

Jane can claim 17.97% of the council rates, interest, QS deductions, borrowing expenses, basic strata levies, repairs and other deductible ownership costs. If Jane rented through AirBnB then the fees charged would be 100% deductible. The room may even be deductible when available but not occupied.

Jane would need to retain a record of the date the tenancy commenced and the periods this occurs as a proportionate loss of 17.97% of the main residence exemption will also result for the days affected.

 

Apportionment must be on a reasonable basis.

In the absence of any unusual facts, the Commissioner accepts that floor area is a reasonable method.

For example, with home office or business expenses see paragraph 7 of TR 93/30.