Category Archives: STATS REPORTS SURVEYS

A spare bedroom may get in for you thousands of dollars, but is it worth renting it out?

There are eight million spare bedrooms across Australia, with almost 80 per cent of households leaving at least one room empty, an analysis of census data shows.

With the average cost of renting a room at more than $200 a week in 2017, this could add up to more than $10,000 a year into the pocket of home owners, Finder spokeswoman Bessie Hassan said.

”Renting out a spare bedroom could earn you $958 a month towards monthly mortgage repayments or household bills,” she said.

Renting out a room in your home can be lucrative, but there may be implications for the property owner and the tenant. Photo: Jim Rice

In total, 5.6 million owner-occupied homes and 2 million rental properties have more rooms than they need for its occupants.

It could also save renters money – equalling to a saving of about $3500 a year compared to the cost of renting a one-bedroom apartment.

Cost of renting a room in major cities

Weekly rent Annual rent
Sydney $289 $15,028
Darwin $225 $11,700
Melbourne $216 $11,232
Gold Coast $201 $10,452
Canberra $194 $10,088
Wollongong $193 $10,036
Brisbane $193 $10,036
Sunshine Coast $184 $9568
Perth $184 $9568
Newcastle $176 $9152
Cairns $173 $8996
Hobart $167 $8684
Adelaide $164 $8428
Townsville $156 $8112
Geelong $153 $7956

Source: Flatmates.com.au, Australian Bureau of Statistics, Finder

Room rent calculated as a weighted average by taking into account weekly rent and population of different regions.

But is it as straightforward as it sounds?

What home owners should know

Renting out a room can quickly net a home owner a substantial sum.

But while it might help owners pay off a mortgage when they have one – the promise of extra cash from the spare room won’t be considered extra income by the bank when they’re looking to buy in the first place.

As a result those whose income is less than necessary for their dream home won’t be able to point to rental income to get them across the line, Dream Financial mortgage broker Paul Bevan said.

And for those who want to use the income from a rented room to take on an additional loan will also face difficulties.

“There’s only one specialist lender that will consider this type of income and it’s limited to $100 a week and the owner would need to show a lease agreement and that the rental income has been declared in their tax return,” Mr Bevan said.

The additional income would also have an impact when it comes to tax time, and potentially when selling the home, which should be considered before leasing a room.

The income from the spare room has to be declared to the ATO at the end of financial year, and therefore it could be taxable, VJR & Associates and Keshab Chartered Accountants accountant Jeremy Iannuzzelli said.

“It is also an implication for the capital gains tax status of your home,” Mr Iannuzzelli said.

Usually, your home is exempt from capital gains tax – but if you use it to earn income then this may no longer be the case.

In many situations, capital gains tax could be charged pro-rata based on the proportion of the property that was rented, he said.

For instance, if 10 per cent of the property was rented for the entire time you owned your home – then tax may be charged on 10 per cent of the capital gains. The ATO has a tool for working this out.

And, alike to an investment property, the home owner can claim pro rata tax deductions based on the percentage of the space available for rent.

“This would be the same if you rented out a granny flat,” he said.

Renting out a spare room to a tenant isn’t the only way to cash in on unused rooms in the house.

Spare bedrooms, attics, sheds, driveways and storage cages could also be rented out to those looking for storage options, Spacer chief executive Mike Rosenbaum said.

In urban areas, this could net between $250 and $350 a month – without having someone live in the property, which Mr Rosenbaum said would suit empty nesters and retirees.

“Families are also renting out storage cages and garages to help pay for bills, and city professionals who tend to catch Uber instead of driving a car, rent out their spare parking space for extra cash,” he said.

For those renting out a room for any purpose, it’s also crucial to consider insurance policies that cover this activity.

www.australianmortgageloans.com

What renters should know

For those who choose to rent a room in someone’s home, there may be some difficulty determining whether they would be legally considered a lodger or a tenant, Tenants Union of NSW senior policy officer Ned Cutcher said.

This definition has a significant impact on the rights of the renter, including notice periods and how bonds are kept.

“The old common law test of ‘exclusive possession’ doesn’t apply to tenancy agreements as defined in the Residential Tenancies Act, but boarders and lodgers are expressly excluded from the Act’s coverage,” he said.

The new test – known as “mastery of premises” – relates to whether the landlord reserves the right to access the room. In this situation, in NSW the tenant is not protected under the Tenancies Act.

In most cases, a renter is most likely considered a tenant if they can lock the room, do not get meals or linen as part of the agreement, have their own cooking facilities and are not subject to “house rules”.

In most other states, including Queensland, Victoria and Western Australia, the specific Tenancy Act does not apply to boarders and lodgers.

Henry Sapiecha

SYDNEY AUSTRALIA WHERE THE GAP BETWEEN RICH & POOR GETS EVEN WIDER

Sydney ghetto alarm: wealth gap splits city

Darling Point and Point Piper reported the highest average taxable income.

JESSICA IRVINE 7:53am | Much time has been spent focusing on Mount Druitt but another suburb lags even further behind.

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Henry Sapiecha

Australia’s richest and poorest postcodes shown by tax statistics

blonde woman flashes oz banknotes image www.money-au.com

Australia’s richest and poorest postcodes revealed

ATO statistics reveal the country’s poorest and richest postcodes, with some surprises.

Australia’s richest live in harbourside Sydney and earn more than eight times the nation’s poorest, who live in rural NSW, Tax Office statistics show.

The latest Taxation Statistics for 2012-13, based on information people report in their tax returns, again highlights the enormous pay gap between the nation’s richest and poorest – there’s an average (mean) income difference of $155,823 between the richest postcode (2027) and poorest postcode (2403).

A total of 5980 Australia’s highest earners fell within postcode 2027, which takes in Edgecliff, Rushcutters Bay, Darling Point and Point Piper in Sydney. It took the number one spot in 2011-12 as well. In this area, which falls within Communications Minister Malcolm Turnbull’s electorate of Wentworth, the average taxable income was $177,514.

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In the poorest area, postcode 2403 in rural NSW, takes in Myall Creek – the site of the massacre in 1838 where 30 unarmed indigenous Australians were murdered – as well as Delungra and Gragin. Here there were 350 people and the average taxable income was $21,691.

The information, based on the returns of 12.77 million taxpayers, does not account for people in the cash economy or with money sitting in offshore tax havens. But it does take into account tax breaks such as negative gearing when assessing average taxable income.

The data also shows the nation’s highest earning professions. The top 10 included 3570 surgeons with average taxable income of $361,202.

The next highest earning professions were 3015 anaesthetists with average taxable income of $319,033; 7525 “internal medicine specialists” (diagnosing internal disorders) with taxable income of $263,601; 5090 financial dealers with average income of $219,213 and 2645 judicial and other legal professionals with an income of $192,189.

The remaining top 10 included psychiatrists, mining engineers, “other medical practitioners”, chief executives and managing directors and “generalist medical practitioners”.

In terms of postcodes, six of the top 10 richest were in inner and eastern Sydney, three were in Victoria, and one was in Perth.

Sydney’s harbourside eastern suburbs have once again topped the list of Australia’s richest postcodes

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The nation’s second richest postcode was the town of St Andrews in Victoria, which sits north-east of Melbourne. It’s the first time it has made the top 10, and given 655 people fell within the ATO’s data there, it’s possible the average ($148,967) is pulled up by one wealthy person. The ATO would not confirm this, saying it does not disclose information on individual taxpayers.

The third richest postcode nationally in 2013 was 2023, the eastern Sydney suburb of Bellevue Hill. There were 6945 people who lodged returns in this area, and the average taxable income was $143,112. In fourth place was postcode 6011 in Perth. It took in the suburbs of Cottesloe and Peppermint Grove, where average incomes were about $142,504, and 6610 individuals were included. The fifth was the Melbourne suburbs of Hawksburn and Toorak, which typically makes the top 10, and average income was $142,000.

In terms of the poorest postcodes in 2013, seven are in regional NSW, two are in Queensland (4613 and 4626) and one is in Victoria (3637). This is a slight change from 2012, when five of the 10 poorest postcodes were in Victoria.

The second poorest postcode in the nation is 2359, which takes in Aberdeen, Bakers Creek and Bundarra. Here the average income is $24,742. The third poorest is 2361, taking in villages of Ashford, Atholdwood, Bonshaw, Limestone and Pindaroi. Here the average income is $25,431.

The ATO has tweaked the way it reports the data, making comparisons with 2012 data difficult, but income levels remain roughly the same, although there has been a slight increase in taxable income in line with inflation.

The most charitable region in the nation was the ACT – with 109,121 people claiming $62.7 million in deductible gifts and donations. The average claimed in ACT per person was $575. Overall $2.3 billion worth of gifts and donations were claimed nationally, with the average claimed per individual totalling $504.

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Henry Sapiecha
ia