The sharing economy has more than made its mark in the world and continues to grow with the technology revolution that’s unfolding before our eyes. One of the success stories is Air BnB which brings together people with rooms to rent with those requiring accommodation. The nature of Air BnB is such that it opens up income producing opportunities for those who would not have otherwise engaged in accommodation business. Some people who own rental properties are using this business model as a replacement for the usual residential rents received. However it’s not uncommon to see some rent out a part of the home they live in (such as a room) over the course of a year to a number of tourists looking for accommodation. Where you are renting out a part of your home there are some tax implications to keep in mind:
- The income earned is required to be disclosed in your tax return;
- Expenses that can be claimed against the income are similar to those that can be claimed for a rental property. The difference being that for some such as rates, strata levies, insurance and mortgage interest the claim will need to be apportioned on the basis of time and floor area;
- The family home is generally free of capital gains tax, however where it has been partly used as income producing along the way then capital gains tax may apply when you one day sell the property. The capital gains tax would be apportioned depending upon the extent and the length of the time the house was used as income producing.
If you would like to know more this give us a call.
– Paul Chakos
Posted 1.3.17
The information we are providing to you is purely factual in nature and does not take into account all of your personal objectives, situations or needs. The information is objectively ascertainable and, therefore, does not constitute as financial product advice. If you require personal advice you should consult an appropriately licenced person or authorised financial advisor, such as HQB Financial Solutions Pty Ltd.
