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Subletting - How do you work out deductions?

Discussion in 'Real Estate' started by Sk3tChY, 24th Jan, 2013.

  1. Sk3tChY

    Sk3tChY Well-Known Member

    4th Aug, 2007
    Sydney, NSW
    So I'm considering moving into one of my investment properties and subletting the second bedroom, which has posed a few questions:

    1. How do you work out how much of a percentage you can claim on deductions like interest, repairs, bills, renovations, etc. Is it a simple case of 2 people, 50-50? Or does it depend on value/rent?

    2. If I sublet the property fully furnished, will I be able to claim deductions on the furniture/appliances/fixtures they have access to?

    So things hopefully can make more sense, here's a similar hypothetical scenario:

    - Bob has a 2 bedroom investment property worth about $300,000
    - Up until recently, the property was rented out for $300 a week
    - The tenants vacate
    - Bob renovates the property, putting in new tiles, paint, kitchen, bathroom, etc
    - Bob fully-furnishes the property with things like beds, cupboards, dressers, tables, chairs, sofa, television and all appliances like kettle, toaster, oven, etc

    Bob then moves into the property, taking up one bedroom and then rents the second bedroom out to a subtenant for $150 a week.

    This covers both the tenants rent and share of the bills and they are literally allowed to use and access everything throughout the property, except for the main bedroom.
  2. xtanda

    xtanda New Member

    31st Jan, 2013
    I would say, if you move to your investment property, basically, your IP is now become your PPOR. (Of course, there are some technical definition/time delay (6 years) where you can still nominate other address as your PPOR for CGT purposes)

    Hence, your scenario become "Renting out part or all of your home"
    Guide to property

    which is basically a proportion of the floor area that rented out. If you rent it furnished or unfurnished based on market rate, the rest is pretty much similar to normal rental property.

    Note: the part that you declare as "investment property' (for example: 20%) will not be exempted from CGT - meaning if you sell it you will charge CGT on that 20%, even though it is your PPOR.
  3. jeffery85

    jeffery85 Active Member

    20th Jul, 2012
    There is some great info on the ATO website about this topic. Just remember it has to be market rent for the room you can't discount it for a friend etc.