You may need to pay tax on rental income from private boarders or home-stay students. They could be staying in your home, sleepout or caravan on your property.
Boarders and home-stay students are different to flatmates:
- Flatmates share a house, expenses and chores. Usually one flatmate will be the tenancy holder.
- Boarders and home-stay students rent a room in a private home or boarding house. They also get services as part of their rent.
You may, or may not, need to pay tax on the rental income you get from boarders, home-stay students, and relatives. There are two different methods to work out your payable tax. The standard cost method and the actual cost method.
Standard cost method
You cannot use the standard cost method if you have five or more boarders. You can only use the actual cost method.
This method uses a standard cost of living needs. These needs can be:
The method also includes an amount for outgoing costs, including:
- mortgage interest cost
- repairs and maintenance.
The standard cost amount is set by us every year. It is an average of costs from across the country. It is inflation-adjusted annually. The standard costs for the year ending 31 March 2019 are:
|Amount of boarders||Cost for each boarder per week|
1 or 2
3 or 4
Check the standard cost home-based boarding services calculator to see if you have to pay any tax on your rental income.
Check if you need to file a tax return for paying boarders living in your home.Go to this tool