What to know before renting out a room in your home
Whether you’re a property owner or a renter, there are a few things to consider before you take on a boarder or lodger.
Before renting out a room in your home, there are several important factors to consider. According to Kate McCallum, a former financial adviser, it's crucial to crunch the numbers with an accountant or tax agent. Your water, power, and internet bills will increase, and you'll need to account for wear and tear on your property. Rent is also considered taxable income, which could affect your Centrelink payments and capital gains tax exemption if you decide to sell your property in the future.
Dr. Lyndall Bryant, a senior lecturer in property economics at Queensland University of Technology, explains that there are formal home sharing and homestay schemes in Australia that don't impact a homeowner's taxable income. These schemes are paid to reimburse the homeowner for the costs of having a lodger. However, many people may be renting out spare rooms informally, as tenancy regulations typically do not cover boarders or lodgers. Dr. Bryant suspects this happens in an agreement between two people.
Lynn Smith from the Residential Tenancies Authority in Queensland adds that tenancy laws apply if a bond is taken, if four or more rooms are being rented, or if the room is classified as a secondary dwelling. If your rental home has spare rooms, you can invite new housemates to share the property, but you must get written permission from the property owner or manager.
In Queensland, there's no legal requirement for all rental occupants to be on a lease, but it's worth checking the specific legislation in your state or territory. Property managers or owners may ask new occupants for formal applications and references, and the existing tenant should decide whether the new housemate should be a co-tenant or a sub-tenant.
Notifying tenancy agencies of any changes to bond contributors is essential. It's recommended to put any agreements with new housemates in writing, especially when involving friends and family. Meeting the potential housemates more than once, checking their ID and references, and discussing daily living arrangements in detail can help prevent problems. While renting out a room can have benefits like companionship and help with pets, it's crucial to consider the trade-offs in privacy and control.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
