Boarders and Tax

[Kirsti]

Hi all,
First post so please be nice.

My question is: If I were to claim the FHOG and have a border for a bit of income, can I claim deductions for a portion of my property expenses (Dep'n, Rates etc) or would that class it as an investment, therefore ineligible for the grant?
I know they have no problems with borders but if you claim it as income and deductions does that disqualify it?

Thanks in advance,
Kirsti

 

[Joe D]

The reality is that (if possible) you might gain short term benefits in claiming the costs indicated, however, any of these perceived benefits are shortsighted.

By making claims on your PPOR, you would be compromising the future CGT benefit. ie. If you make taxable claims you will need to offset these against the CG when you ultimately sell.

Word of advice - have the boarder(s) but keep it low key and do not make any income or tax claims against it

Rgds

Joe D

 

[geoffw]

I'd go with Joe about not making the claims- but I WOULD declare the income. Don't stuff with the ATO.

 

[Macca]

I am not sure I would declare the rent as taxable income, wouldn't it be seen as simply sharing residential expenses.

If it was your only source of income and you made a profit, eg: you rented out every bedroom, then I think the ATO would be interested, but if I rented out my spare room because I needed the money to survive then I would not be telling the ATO.

I would not be claiming any deductions for my expenses though, if you ever sold the place, CGT could be payable on part of the profit, that would get very complicated, the savings would be minimal, not worth the trouble.

 

[julia]

Kirsti,

Have a read of IT 2167

 

[WinstonWolfe]

Kirsti, you might also read your state's tenancy authority legislation.

You might find that taking in a boarder that is not a relative requires that you collect a bond, to be held by the tenancy authority.

You should also seek information on legal issues relating to boarders. For instance, if a dispute unfolds between you and your boarder over rent owed, or property damaged or stolen. You want to check whether you have the right to evict the boarder on the spot, or must give similar notice to a tenant under a tenancy agreement.

 

[geoffw]

Have a read of IT 2167

Just to help out a little- INCOME TAX: RENTAL PROPERTIES - NON-ECONOMIC RENTAL, HOLIDAY HOME, SHARE OF RESIDENCE, ETC. CASES, FAMILY TRUST CASES