We are exploring the option of renting the spare rooms in our PPOR. We have 4 available sharing one bathroom. Looking for advice on the best way to set this up. 1.Do we advertise for room mates for house share, boarders etc? 2.Do we take a bond? 3.Do they have a lease or contract? Room can be furnished or unfurnished 4.Are locks needed on bedroom doors? Electricity & Water would be included (No gas on property). 5.Would you provide internet? (My concern is the account would be under our name - what if they access illegal material or partake in illegal downloading - are we as account holders liable?) 6.Would you include a fortnightly cleaner for kitchen and bathroom / communal areas? 7. Is there anything else I need to be aware of? Thanks in advance
You need to get advice on how to structure the rental agreement, ie board vs lease, to minimise risk of loss of full CGT exemption
1. Yes 2. Yes 3. Yes 4. I wouldn't. Can make it seem like a druggie boarding house. In a normal house share, there wouldn't be locks. 5. They can provide their own internet. 6. Do you already have a cleaner? 7. Tax implications. Making money from your POPR will have an effect on CGT, I believe. 8. Are you going to declare the income or will it be under the table? 9. Explore getting young (at high school, year 12) foreign students in - sort of a home stay. I believe it pays well. Though you would have to cook the evening meal, I believe.
Renting 4 bedrooms sharing one bathroom would turn into a slum wouldnt do it in ur PPOR. I am currently renting 2 rooms at 220 each a week under the table. Just got them off flatmates.com u can really make your own rules up with how u want it to work.
Totally disagree. I shared many houses with this arrangement. None were slums. All depends on the condition of the house - and the people.
7. & 8. If you have boarders and include bills does it need to be declared - not sure on the rules? Not necessarily looking to avoid tax - more so if there is only $50 pw left in the pocket after paying utilities and tax then it is probably not worth the hassle.
4 different people for one bathroom is too many IMO. If its a sharehouse for young adults fair enough but for your own ppor too much.
Can't see why four people seems too many. Lots of us grew up in bigger families (7 family members, in my case) with one bathroom. These days, some people don't feel comfortable even contemplating sharing... Too much smashed avo?
If you just have a few boarders in your house to help share the costs you do not lose the main residence exemption. IT 2167
U kidding me arent u? Yes back in your day when you grew up that was the norm. Times have changed, no one has 7 kids anymore. Also sharing a bathroom with ur siblings is differnet to random people. I just think to expect 4 random people to share 1 bathroom in your ppor is creating a slum environment . I have 3 bathrooms for 4 people and it works well.
Of course you need a lock on the bedroom door, both for security of belongings and personal safety. If another tenant comes home tipsy, I don't want him/her barging into my bedroom, even if it was allegedly accidental! And four unrelated people needing to get ready for work at the same time need more than one bathroom! Well, you DO want your tenants to be working to pay the rent. Sharing within a family is far different to sharing with strangers. What will you do if one person hogs the bathroom for an hour every morning? Family would sort that out quick smart (well, my mum did with 6 people and one bathroom). Marg
I guess we have had different experiences with sharing. I shared houses with housemates on and off for over two decades. Many different houses. Never had a lock on the bedrooms. (Would have never shared in a household that was unsafe enough enough to need locks. Would have run a mile first). In my experience, housemates also have ways to work out any issues with bathroom hogs. I think house sharing is different from boarding house arrangements, (where I would expect a lock on the door) where you are sharing with strangers rather than housemates. The housemate interview is pretty important. Like a job interview, really. I wouldn't accept just anyone who applied.
Make sure you read up on the definition of 'boarder'. See para 18 and 19 of the IT Ross referred toL 18. What will be decisive in cases of this nature will be the characterization of the arrangements, i.e., do they produce assessable income. Situations arise where the owner of a residence permits persons to share the residence on the basis that all the occupants, including the owner, bear an appropriate proportion of the costs actually incurred on food, electricity, etc. Arrangements of this nature are not considered to confer any benefit on the owner. There is no assessable income and the question of allowable deductions does not arise. 19. Care should be taken to ensure, however, that what may be termed ordinary tenancy arrangements are not dressed up in the form represented by the above heading. If the owner were not party to the sharing arrangements or if the occupants made a fixed contribution to the owner for household costs, there would be a presumption that the payments made by the occupants contained an element of reward to the owner for the occupancy of the residence. Enquiries will be necessary in these cases to establish the extent of the benefit to the owner which should be included in his assessable income. Income tax deductions for losses and outgoings attributable to the residence would be determined on the same basis as applies under the heading "arms length letting of an identified part of a residence, e.g. a bedroom, with access to general living areas of the residence".
One of my sisters does point 9. With 2 foreign exchange students. She gets $300 per week per student. Pretty cushy deal. Just need to provide dinner. She says they're only home 2 or 3 nights a week.
Thank you for the responses. It seems it may be better to move out and rent the whole house by way of 6 year rule - get a depreciation report and claim expenses. I'll have to read through Terry's tax tips on this - do you have to be renting elsewhere or can you reside in another property you have purchased but is not considered the primary residence for tax purposes.
