澳洲Australia property Renting out part of your property - capit


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I read if someone buys a home with a granny flat - and they live in the house but rent the flat out to someone, that they lose their capital gains tax exemption, and would have to pay land tax. Is that right!? (In NSW.)

If this is correct, where can I look up these extra costs?

And is there any difference if the flat were either separate or attached to the main house??  

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You will lose a %, but not all, of your PPOR CGT-free status if you build and rent out a GFlat.
Your Accountant will crunch your individual numbers.
Land Tax in NSW is not payable until you exceed the threshold (currently about $386,000).
Look up OSR NSW on google.
It makes no difference if attached or unattached.  

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My understanding is that if both electricity and water are paid by the owner (no separate meters) then the person in the detached granny flat is treated just as a boarder living inside the house would be - hence no tax implications because they're sharing and the 'rent' is actually payment for their living expenses.  

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weg said: ↑
My understanding is that if both electricity and water are paid by the owner (no separate meters) then the person in the detached granny flat is treated just as a boarder living inside the house would be - hence no tax implications because they're sharing and the 'rent' is actually payment for their living expenses.Click to expand...
This is not correct. A boarder would only be paying incidental costs such as helping out with electricity. Anything more would be rent.  

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Terryw said: ↑
This is not correct. A boarder would only be paying incidental costs such as helping out with electricity. Anything more would be rent.Click to expand...
OK, I meant the more common 'share' situation where it's not just covering incidentals.

So are you saying there would be part CGT to pay if I had someone living IN my house for $100 pw when the incidental costs are only $60?

Do people declare this?  

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weg said: ↑
OK, I meant the more common 'share' situation where it's not just covering incidentals.

So are you saying there would be part CGT to pay if I had someone living IN my house for $100 pw when the incidental costs are only $60?

Do people declare this?Click to expand...
Yes CGT would be payable in that situation - technically anyway! Especially if rental expenses have been deducted.  

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It's never worth it.

Don't claim any rent received....eat it and wear it.....certainly don't claim any deductions from the ATO.

Keep your PPoR (if in an individual name) CGT free and Land Tax free.  

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Well there you go...

I was obviously told wrong in the first place :D.  

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Terryw said: ↑
Yes CGT would be payable in that situation - technically anyway! Especially if rental expenses have been deducted.Click to expand...
But who would declare the rental expenses if they were having someone in to "contribute to expenses"?

It would be interesting to know. I think the desire to save a little tax in such a circumstance would be more than negated by the capital gains tax they would pay on sale.  

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wylie said: ↑
But who would declare the rental expenses if they were having someone in to "contribute to expenses"?

It would be interesting to know. I think the desire to save a little tax in such a circumstance would be more than negated by the capital gains tax they would pay on sale.Click to expand...
People who don't do proper research for one, like me :eek:... I was 22 at the time and didn't really think about it, it was a pain to sort but I learnt a valuable lesson.

Sometimes in life you're there to serve as a warning to others haha!  

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Wow, that www.osr.nsw.gov.au site is so confusing! For instance, Propertunity said:

Propertunity said: ↑
You will lose a %, but not all, of your PPOR CGT-free status if you build and rent out a GFlat.
Your Accountant will crunch your individual numbers.Click to expand...
The OSR site states: "... the owner may nominate a proportion of the total land value, which is the 'fair and reasonable' proportion of the land value attributable to the dwelling."

So forget the accountant. It seems *you*... get to... that's right - GUESS!

Then the OSR interchanges the terms "exempt" and "concession", here: http://www.osr.nsw.gov.au/taxes/land/exemptions/occupancies/

"If you have let out part of your principal place of residence to another person/s and receive income from this, you may still be able to claim an exemption. To qualify for this concession, you can let part of your house to two paying tenants or boarders, but the area occupied by the tenants..."

An exemption is completely different to a concession. (Except when government is purposely trying to confuse everyone with their gobbledegook legalese.)

So according their first statement, you have guesstimate the percentage of your PPoR not being used to earn money (and that is exempt). But now they've said you can rent out part of your property to not one, but TWO paying tenants!? (And it's all exempt!?!?)

"To qualify for this concession, you can let part of your house to two paying tenants or boarders, but the area occupied by the tenants and boarders must be limited to no more than one of the following:

* one room, or
* one suite of rooms, or
* one flat, or
* one flat plus one room, or
* one suite of rooms plus one room, or
* two rooms, each of which is separately occupied."

Huh!? That is:

1 room
a group of rooms
1 flat
1 flat + 1 room
a group of rooms + 1 room
two rooms

Shoot me now.

Then I was reading about the land tax threshold. Propertunity was correct. It's $387,000 currently. But they don't explain what that means exactly. Do they mean if the value of your granny flat (or the part of your PPoR that you're renting out to someone) is more than $387,000 you then have to pay... something!? (What!?) And is it just the value of the rooms/flat, or the rooms AND the same percentage of the land they're on?

And since they said earlier you could rent to two people - are you exempt from both CGT & land tax anyway, or not?

Sheesh! Every time I look up a government site, I end up with 3x the questions I started with. That's why I ask in places like this.  

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CGT is a commonweath tax administered by the ATO. The above would relate to land tax which is a state based tax administered by the OSR in NSW.  

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I think an exemption is one form of concession as well:cool:  

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in NSW the PPOR land tax concessions / exemptions are dealth with under Schedule 1A of the Land Tax Management Act
http://www.austlii.edu.au/au/legis/nsw/consol_act/ltma1956173/sch1a.html  

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weg said: ↑
OK, I meant the more common 'share' situation where it's not just covering incidentals.

So are you saying there would be part CGT to pay if I had someone living IN my house for $100 pw when the incidental costs are only $60?

Do people declare this?Click to expand...
I doubt it!
Depending on costs for telephone, rates, food, electricity, water etc and who pays, that $100 per week may not even cover costs.... ;)  

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