If you're charging rent, you may need to pay tax on the rental income you earn in the same year you receive it. Your rental income could be from a house, land, caravan, sleep-out, buildings, holiday home or room in your own home.
Renting out a house or room
Payments you get for people renting your home or a room are taxable. This includes payments from:
- people renting through websites such as Airbnb or Bookabach
- one-off or irregular rentals.
You must include the amounts you get in your tax return. Rental expenses can be deducted from your rental income.
Renting out a holiday home
There are different tax rules if you have a mixed-use holiday home. That’s when you use the holiday home, rent it out (or it's available to be rented out), and it's unoccupied for 62 days or more.
You don't need to include holiday home rental income in your annual tax return if you earn less than $4,000 a year from it.
You can choose not to declare this rental income. This means you will not be able to claim expenses for the holiday home.
Private boarders or home-stay students
If you have five boarders or more then you must declare your rental income in your income tax return.
If you have less than 5 boarders or home-stay students, you:
- do not need to declare rental income if it is under the weekly standard cost.
- can use the actual-cost method to work out whether you have to pay tax on your rental income.
Joint-owned rental properties
If you own rental property in partnership with 1 person or more, you may need a:
- shared set of rental records
- IR7 income tax return to file with us.
All joint-owners will need to file their own IR3 tax return for their share of the rental income.
Flatmates or tenants
Payments flatmates make to cover their share of accommodation costs is not usually taxable income. If you are making a profit from flatmate rental payments, you will need to file a return. You must include rental income in your individual tax return IR3 for:
- flatmates living with you
- tenants living in another part of your multi-flat building.
You can deduct expenses from your rental income. You can only deduct these for the part of the property you rent out.
Rental expenses can be either:
- for the part of the property you rent out
- apportioned for the whole property. For example, if you rent out 25% of your property you deduct 25% of all the property expenses.
Rental income and expenses
- You may have to pay tax on the rental income you earn.
- You can deduct rental expenses from the total rental income you earn in the year.
- You need to fill in an annual tax return.
- You must keep records of the income and expenses for your rental property for at least 7 years.
- Tenancy Bond Centre payments you receive for things such as damages and rent arrears are rental income.