tax implications of renting out a bedroom in your own home

Hi
Just thinking about renting out a room in my own home, on which I have a mortgage. (To do this I would have a proper rental agreement drawn up).
-Are there any tax implications? For eg, the loan on an investment property can be negatively geared to obtain tax benefits. Can a portion of the home's value be associated with the rentor, and then negative gear that amount/portion of the loan?
-If anyone has any suggestions or advice, please let me know.

Thanks
A

Hi Astone,

From what I have read/heard you can proportion the costs of your home eg rates, interest on loan etc and claim them back on tax. You will have to declare the income from your boarder though.

Nat

thanks

hi
thanks
that's great!
i just wanted an "in principle".

so i guess now i have to go see an accountant

thank you

However, you may lose a proportion of you CGT exemption for your home. I thought it was the portion which you claimed for tax uou can't get for PPOR CGT exemption.

thanks

hi
thanks for your response!
yes, that's probably true

as a separate thing, i had heard that if you have an IP you've held for 6 years, and had rented out for 6 years, you are CGT exempt.

it would be good if someone who's "in the know" could confirm this

Definately not. If you have an IP or any assett and sell it you will pay GCT on any profit made at your marginal tax rate. If you hold the assett for a year or longer there is a discount- I think you will only pay CGT on half the profit instead of all of it. Not sure exactly but you will definately pay CGT on the sale of an asset unless it is your own home or is exempt in some way. This is my knowledge anyway.

Nat

Originally posted by natmarie73
you will definately pay CGT on the sale of an asset unless it is your own home or is exempt in some way.

Click to expand...

Nat,

It is astone's home, so it is normally exempt from CGT.

Appears to be a bit of confusion here, but as I understand it, your question relates to the CGT implications relating to an IP in a situation where you also own a PPOR. If that's the case the answer is:

- you will not be able to claim 6 year exemption on the IP unless it has previously been your PPOR at some time in the past;

- if it was your PPOR in the past you may claim 6 year CGT exemption from the time it ceased to be your PPOR;

- however, if you choose to claim 6 year exemption on the IP you will NOT be able to claim PPOR exemption on your existing PPOR for the same period.

Cheers!