Tax implications of renting out by the room

Discussion in 'Accounting & Tax' started by CSDS, 23rd Jan, 2018.

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  1. CSDS

    CSDS Active Member

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    Hi there.

    I am based in Melbourne but will be working in a Regional city every second weekend which is about 90 minutes away.

    I am thinking of buying a 2 or 3 bedroom property to live in while I am there but renting out one of the rooms to someone else.

    Can anyone advise re:

    1. What the tax/accounting implications of this may be?
    2. How to go about finding a tenant?

    Many thanks.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    1 Property subject to CGT
     
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Board or on lease ?

    Do you have a ppor ?

    Ta

    Rolf
     
  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Income is assessable
    A share of the expenses may be proportionately deductible
    CGT %
    No land tax issues if you remain resident
    A changed method for CGT calculation will be available - The non-deductible % of costs may reduce the overall CGT profit
    Insurance ?
     
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  5. RPI

    RPI Property Lawyer, Town Planner Business Member

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    if in QLD you would be ineligible for a home concession on your transfer duty, assume similiar there.
     
  6. The Y-man

    The Y-man Moderator Staff Member

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    Target a specific market demographic you are familiar and comfortable with. Then advertise in the social or physical media space they frequent. eg uni notice boards for uni students.

    The Y-man
     
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  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Tinder?
     
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  8. Christina46

    Christina46 Well-Known Member

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    Does this still apply if it is a "board" arrangement?
     
  9. BennEznElle

    BennEznElle Well-Known Member

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    A 'board' arrangement would generally be a close family member paying a non commercial amount which is generally there to compensate for the costs associated with living there. Think 20 year old child paying 50-100 per week to cover parents buy food, electricity, water, doing washing etc. There are no tax implications regarding this arrangement.

    The example provided by the OP suggests more third party tenant at a commercial rate.
     
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  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    no, but do you realise what 'board' means?
     
  11. Christina46

    Christina46 Well-Known Member

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    I'm assuming that arrangements with family members (eg adult children) are ok, not sure how far the definition can be stretched though...
     
  12. CSDS

    CSDS Active Member

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    Hi Rolf,

    What is the difference between Board and Lease?

    I am renting in Melbourne but would like to buy a PPOR there within the next 12-18 months.

    Thanks,
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    Could be unrelated. Board is as BennEznElle mentioned - not paying any form of rent, but a nominal sum to cover electricity and gas - perhaps food.
     
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  14. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    The definition of board for tax purposes means the rent is token and includes food. Board typically applies short term to persons you know but thats not always the case. A boarder will not have a residential tenancy and right to remain resident but may have a month to month period of notice available.

    If you rent rooms its rent not board. A house share is a great example

    Boarding houses a whole different issue.

    Board v's Rental tenancy comes with numerous state / Fair Trading etc rules. You cant operate a boarding house without it being registered to prevent illegal conditions and unfairly limiting occupants rights. Its very frowned upon and can lead to council prosecution.
     
  15. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Family members are usually love and affection and the sum is nominal to cover food, internet, washing etc.....Not assessable. No tax concerns.