PPOR renovations - renting half of house.

[Blair007]

Hi all

So am considering doing some renovations to my PPOR, basically putting up a few walls to divide the house in half internally and then some outside fencing to have separate courtyards, front courtyard for one section of house and rear courtyard for the other section.

would keep the master bedroom with ensuite and front living area ( would have to install new kitchen ) for us and then the other 3 bedrooms, bathroom, kitchen and living area would be rented out to someone else.

all up renovations would come to about 30k, the design would work quite well leaving a nice sized section of the house for us and also a decent 3 bedroom section to rent out.

Most 3 bedroom houses in the area are renting for low 400's so i think 350 would be fairly easy to achieve considering we would probably pay for utilities.

it would be a pretty nice return for us spending 30k to get 300ish a week ( minus utilities )

our ppor is survey strata with common property so granny flats are not allowed but this would just be internal renovations so i don't need council approval for this.

not sure how it would work legally wise though, is this allowed? is it something i have to declare tax wise? and what sort of considerations do i need to think of before getting people in to rent the property i.e bond, eviction notice etc?

all opinions appreciated!

cheers

blair

 

[HD_ACE]

Some things to look into:

Council will have to approve a dual occupancy if rented to seperate party. If done properlyshouldnt be a problem ie firewalls used etc. I think a 2nd kitchen would trigger this. No oven is a way to get around this but then you have insurance and liability to think about.

- cgt exemption could be comprimised

- income will have to be declared unless they are just "paying their way"

- in return some thing will be able to be claimed ie interest, rates depreciation etc but may not be worth the cgt forfit.

Cheers

 

[Tim86]

I'm doing something similar. I'm raising my house and building in underneath and then renting out the bottom floor.

I'm not 100% sure about the tax implications. I would love it if they make me declare the extra $640 per week. That means that I can write off a heap of interest and expenses. I'll end up ahead. I've been told by an old workmate that up to a certain $$$ the ATO doesn't care about boarders and you don't have to declare.

I would maybe try a share accommodation setup where you rent by the room and include bills in the rent. Otherwise splitting bills would be a pain. You probably won't get approval for a second meter either. I think it makes things a lot smoother if you just put them down as boarders.

I don't know the CGT implications. I'll never be selling my PPOR so this isn't an issue for me.

Good luck

 

[Blair007]

The plan was to rent it out in a share accom style, id most likely be looking for a couple, we would just rent one half of the house to them but still pay for all the bills etc - hoping this would pass as a share accom situation?

 

[Terry_w]

The plan was to rent it out in a share accom style, id most likely be looking for a couple, we would just rent one half of the house to them but still pay for all the bills etc - hoping this would pass as a share accom situation?

income would be taxable and CGT apply to half the house