Renting out all or part of your home
If you are considering renting out all or part of your house through a digital platform like AirBnB, Home Away and Flipkey you need to make sure know the following:
1. Keep records of all your earning and declare it on your income tax return.
Renting out your house or a room in it can be a great way to earn an income. It is assessable taxable income by the ATO. This means that it can be taxed, provided you earn enough to exceed your tax-free threshold. Records of rental income and deductible expenses need to be kept for five years, which is especially relevant for long-term deductions like asset depreciation. You can’t claim any rental property expenses on your tax return if you can’t prove the claim through a receipt or bank statement, so always keep a record of receipt.
2. Keep records of all the expenses you can claim as deductions.
The following claims you are eligible to make on your rental:
Cleaning and maintenance fees, including laundry and cleaning supplies
Property and private mortgage insurance
Service fees charged by the digital platform
Repairs made to the rental property
Mortgage loan interest
Like all transactions with ATO, remember to keep all of your receipts and the dates of rent to correctly make your claims.
3. You don’t need to pay GST on amounts of residential rent you earn.
Good and services tax doesn’t apply to residential rentals. You won’t be liable for GST on the rent you charge, but you will not be able to claim GST credits for associated costs.
Before you rent out make sure you know the basics and if you’re still unsure about the tax obligations as a landlord take the time to discuss your plans with a registered tax agent like the Tax Accountant to know more.
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