Technology has simplified a lot for us. Renting your home is just one thing you can do right from your smartphone using a digital platform. But before you do that, you should understand that it will be a source of your income and you need to pay tax for the same. So, here’s what you should know before you start renting a part of your home or the whole of it.
Maintain Earning Records and Declare the Income
ATO covers earnings from home rentals taxable if your total income crosses the tax-free threshold. Even if it is not, you should declare the amount you are earning every year to the ATO. For this, you need to maintain a track record of how much and when did you earn. Plus, you should keep your incomes and deductible expenses on record for at least 5 years. That’s essential to claim deductions over the long-term such as asset depreciation. However, if you don’t have a record or receipt of any expense on the rental property, you can’t claim for the same.
Know What Expenses are Eligible for Deductions
Taxpayers renting their property can claim deductions for the money spent on it for the following:
- Cleaning and maintenance (also cleaning supplies and laundry)
- Mortgage loan interest
- Mortgage insurance
- Service fees paid to a broker or the digital platform used to find tenants
GST Not Applicable
While you will be paying taxes on the earnings in your individual tax return, the income isn’t liable for GST. Similarly, you can’t claim any GST credits using the same.
And if you feel confused about declaring your house rental income, you can discuss it with accountants in Toongabbie for clarification and advice.