Granny Flat

Hi, people last year we purchased a house with a detached GrannyFlat/Studio we haven't put it to any use and thus have a friend whose daughter a uni student has offered to rent it out from us just trying to get an idea what the tax implications are I would like to keep it simple,

I have no idea where to start she is in genuine need as she may have to delay her start at uni due to having problems finding accommodation.

I understand it would be seen as an income but not sure if that would be across both our salaries or can we just put it against one can you claim back part of the interest on our mortgage etc.

I have a mate at work that did this and he ended up being audited and in a bit of strife as he and his account were quite shonky it seems, he blames his accountant lol

Just want to avoid any pitfalls,

Thanks, Willy

 

Yes, you will need to declare the income. If you DO rent it out, get a Property Manager to manage it, especially seeing as it's a friend's daughter. Sometimes people take liberties with people they know, so this keeps a buffer between yourself & your tenant.

 

Being an investor means not doing favours for friends and relatives. Non-market rent can affect deductions. Ask yourself if you will take a bond and use a written lease and use a PM and take action in a tribunal for this person. If not, dont. Little things like insurance (LL) can also be impacted.

It is certainly taxable income. The owners of the property will be the parties to share and report the income. You will likely need guidance on what impact this has on your home and apportioning deductions etc. Some costs will be direct eg PM fees and specific GF repairs and LL insurance and other costs will be apportioned eg council rates, electricity ?, water ? etc