SearchRental income tax
Steven asks:
(updated on Friday, August 12th 2016)
I have recently bought a home and income property as a first home owner. It has two separate dwellings on the title. I stay in one and rent out the other to help to pay my mortgage. It has a seperate power and water meter. Do I still need to pay tax for the rental income? If so, how do I pay it please?
Our Experts Answer:
The renting of a separate flat or dwelling in a property does not constitute a "flatmate" and the income must be declared.
Typically, holding costs like rates and interest are apportioned based on an accurate calculation of the sqm of the rented dwelling as a percentage of the entire dwellings combined.
Costs like repairs would generally only be claimed if they were to the rented dwelling but then claimed in their entirety. If a repair was to the entire building, like painting the whole place for example, the apportionment using sqm would be made. If this calculation indicates a profit tax is payable, if there is a loss, conversely this is deductible and may derive a refund.
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