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  • Renting out a room?

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    How to work out the expenses you can claim

    If you rent out all or part of your home through the sharing economy, for tax purposes you need to:

    • keep records of all rental income earned and declare it in your tax return
    • keep records of expenses you can claim as deductions
    • calculate your capital gain or loss when you sell the property

    Income you need to declare:

    • all income before fees and commissions
    • insurance payouts, for example, compensation for damage caused by renting
    • bonds or security deposits you become entitled to retain
    • letting and booking fees you charge, including cancellation fees.

    Expenses you may be able to claim include:

    • council rates
    • interest on a loan for the property
    • electricity and gas
    • property insurance
    • cleaning and maintenance costs
    • fees or commission charged by the platform
    • other expenses that directly relate to the earning of your rental income.

    How much of the expense you can claim will depend on:

    • the number of days you rent out the room or whole property during the year
    • the portion of the property you have rented out (for example, a room or the whole property).

    Working out the deductions you can claim

    • How big is the property?
    • How big is the rented room?
    • How big are the shared/ common areas?
    • How many days was the room rented out?

    How to work it out

    Rented room (claim 100% for days rented):

    Rented room size divided by total size of house/unit multiplied by number of days rented divided by total days in the yesr multiplied by 100 = % of expenses claimable

    Common areas (claim 50% for days rented):

    Total common areas divided by total size of house/unit multiplied by number of days rebted divided by total days in the year muliplied by 50% multiplied by 100 = % of expenses claimable.

    Example

    (80m2 unit, 10m2 room rented for 150 days)

    Floor plan showing spare room for rent of 10 metres squared, own bedroom and bathroom of 20 metres squared and total shared common areas (including second bathroom, balcony, kitchen and lounge of 50 metres squared.

    Rented room:

    10 divided by 80 multiplied by 150 divided by 365 multiplied by 100 = 5.13%

    Common areas:

    50 divided by 80 multiplied by 150 divided by 365 multiplied by 50% multiplied by 100 = 12.84%

    Total percentage of expenses you can claim = 17.97%

    End of example

    Capital gains tax

    When selling the property, you may have to pay capital gains tax (CGT).

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      Last modified: 12 Jul 2019QC 59553