There are more than 9 million spare bedrooms in Australia, according to the latest census. If you have one or more, have you considered that there are ways to make money from them? With the high and rising cost of home ownership in Australia it makes sense to use your home to help pay the mortgage.
The good news is that the internet has made it much easier to find someone to rent your spare room, or any other surplus accommodation, either long term or short term. No matter where you live you can take in a boarder or flatmate. Renting to friends can sometimes cause complications so if you prefer a stranger, sites like flatmatefinders.com.au can help. It’s free to create a profile and view matches on this site. But if you want to activate your profile and initiate contact with potential tenants, it costs $24.95 for four weeks and $29.95 for eight weeks.
If your home is in a desirable location, particularly if it’s near a major CBD or a beach, a spare room could prove attractive to tourists. There are a number of websites that enable you to advertise your accommodation to the world, including Stayz (stayz.com.au) and Airbnb (airbnb.com.au).
Stayz is an Australian site that lists about 38,000 properties in 1700 locations. It is owned by HomeAway, which claims 1 million listings around the world. To list your property on Stayz you pay an annual fee of $164 and $15.90 per booking night, with the guest paying the owner direct. Or you can use the Stayz online payment system, where the guest pays online and your fee is 8% of the total booking amount. Airbnb is based in the US and boasts more than 1 million listings worldwide, ranging from simple rooms to castles, encompassing more than 34,000 cities in more than 190 countries. For an owner it’s free to list on the site. Airbnb collects payments from guests when they book and remits the funds to the owner 24 hours after the guest arrives. A 3% host service fee is deducted and guests also pay a fee of between 6% and 12%. It provides hosts with insurance cover of $900,000.
If you live within 30 minutes of a university or school you could rent out a spare room to a student. The Australian Homestay Network (homestaynetwork.org) can organise this. You need to give each student a room, food (three meals a day) and space to study and all of this must meet specified standards. In return you will receive 85% of the weekly fee charged to the student, which ranges from $220 to $300. This payment is designed to reimburse the host family so it is not taxable for up to two students in a single household.
Renting out spare space can be a nice little earner. For example, Sydneysiders collected $214 million from Airbnb guests over the 12 months to July 2013, according to a study by BIS Shrapnel for the website. Some 48% of Airbnb hosts say the income they earned helped them stay in their homes and 60% say it helped them pay their rent or mortgage. But you need to keep in mind that the tax man wants a share of any income you earn, even that from your home. The only exception is where you rent space to students and the payment is regarded as reimbursement.
When you declare the income you receive from renting you will be able to claim deductions for costs such as insurance and depreciation of fixtures and fittings in rented rooms, as well part of your utilities, rates and water bills.
Your family home is usually exempt from capital gains tax but if you earn income from part of it , such as renting out a room, part of any profit you make when you sell is likely to be liable for some CGT. This is payable on a pro-rata basis for the percentage of floor space used to provide income and for the period you receive income.
A resolution that’s worth keeping
Did you resolve to manage your finances better this year? If so, it’s a resolution you should stick to. With both fixed and variable home loan rates at historic lows, paying ahead could offer benefits such as saving on interest costs and helping to pay off your loan faster.
With many lenders, paying more than your minimum repayment may also give you the flexibility to reduce or put your payments on hold for a period, offering a “repayment holiday” down the track. This could be helpful when planning for a period of reduced income and to protect against unexpected events.So take some time to make sure you have a home loan that works for you. With so many options and so little time, it can be helpful to use independent ratings and awards such as Canstar-rated products and Money Best of the Best awards for guidance.