Soon-to-be empty nester wants to rent out rooms but put off by tax

Census figures reveal there could be up to 13 million empty bedrooms across Australia. Home-sharing advocates argue clearer regulations could encourage property owners to rent out these rooms. However, owners express hesitation due to tax confusion, despite available exemptions. Ali Bradley, a Brisbane home-owner, wishes to provide affordable housing to those in need but is deterred by the tax implications of renting out rooms.

Concerns over cost, complexity, capital gains tax, income tax, and regulatory complexities have prevented her, an empty nester, from taking on boarders. Ms Bradley believes the goal should not be profit but providing housing, using the income to cover maintenance costs for her older home. Property economist Lyndall Bryant has researched these shared arrangements and notes they were once common, with students or apprentices renting rooms in larger homes.

However, she finds it puzzling that taking in boarders is no longer standard practice. Her research indicates several barriers, mainly the fear of incurring both income and capital gains taxes, as well as potential impacts on pension eligibility. Safety and security issues when hosting strangers are also concerns. Overseas examples, like Ireland's incentive-based scheme, show promise.

Countries are acknowledging the rental crisis and need for more affordable housing options. The Australian Taxation Office (ATO) outlines exemptions for board arrangements, such as when children or close family members reside. However, standard residential tenancy laws don't cover boarders or lodgers, except in Queensland where the government is committed to ensuring safe and affordable housing.

Advocates call for clearer guidelines and protections, while the federal treasurer declined to comment on tax clarifications for home-sharing.