FHOG/CGT question.

I have a friend who has currently bought a new 4BR property using her FHOG as PPOR.
Market rent is about $440 per week. She will be renting out the other 3 rooms.

The boarders will be living there one or two days a week. (however are willing to pay a whole weeks worth of rent to secure that 1-2 days)

One of the boarders needs an invoice for rent so he can claim Living away from home allowance.

What's her best option to take:
1. charge rent by the room and apportion 3/4 of the rent and utility bills + depriciation schedule (is this legal) as a tax deduction. From what I know this should be apportioned to market rent. What are the consequences of not renting it out for market rent?

2. Do not rent out until after 6 months when FHOG is finished. Charge rent and invoice all boarders and claim appropriate tax deductions. This way the place is still initially a PPOR and should it be sold in the future would be exempt from CGT.
 
I have a friend who has currently bought a new 4BR property using her FHOG as PPOR.
Market rent is about $440 per week. She will be renting out the other 3 rooms.

The boarders will be living there one or two days a week. (however are willing to pay a whole weeks worth of rent to secure that 1-2 days)

One of the boarders needs an invoice for rent so he can claim Living away from home allowance.

What's her best option to take:
1. charge rent by the room and apportion 3/4 of the rent and utility bills + depriciation schedule (is this legal) as a tax deduction. From what I know this should be apportioned to market rent. What are the consequences of not renting it out for market rent?

2. Do not rent out until after 6 months when FHOG is finished. Charge rent and invoice all boarders and claim appropriate tax deductions. This way the place is still initially a PPOR and should it be sold in the future would be exempt from CGT.

3/4 of all ownership costs would be deductible against the rental income received. ie interest etc. Its possible there could be a loss.

Failing to account for who has paid and not paid rents is a problem waiting to happen. NSW Law for boarding houses and leased accommodation laws on one the NSW Fair Trading website. The FHOG implications are unrelated. I'm unaware that the FHOG has a test that applies to unrelated others living in the home. My understanding is that the owner must occupy.

Pro-rata CGT will always apply to this property. A 100% main residence exemption would never be available. Only a 25% exemption. You cant eat both the egg and chicken and then complain.
 
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She's just decided to live in it for 6 months then rent it out to boarders.
I believe this satisfies the FHOG and main residence exmption.
 
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