Flatmate tax implications?

Our Experts Answer:

If they are boarders you can elect whether your income will be based on the standard cost of boarding ($243 per week for each boarder for one or two boarders). For boarder two and three the rate reduces to $198 per boarder. Five or more boarders and you can't use weekly standard cost  or actual cost basis. The standard cost is designed to include food, heating, telephone, power and transport. If the rent you collect is less than the standard cost no income need be declared. If the tenants are considered flatmates, you keep a record of actual costs that relate to the area you are renting out or alternatively record the total costs and calculate the deductible portion based on the area rented out. if you visit www.ird.govt.nz have a look at the IR264 guidebook to rental income. Pages 32 - 41 explain the rules in more detail with worked examples.