Q Due to a relationship separation, I am looking at bringing a flatmate/boarder into my owner-occupied property. Are there any tax implications if I have either a flatmate or a boarder?
A Firstly, there is a difference between a flatmate and a boarder or homestay student. A flatmate is someone who literally just rents a room from you, but a boarding arrangement goes further than that and generally includes a level of service like providing food, meals and even transport.
If it’s a flatmate arrangement, the rental income is taxable, and you must use the actual cost method to calculate deductions. They must then be apportioned between the income earning and the private use of the dwelling. If your expenses exceed rental income the excess loss is ring-fenced.
If it’s a boarding arrangement, you can use the standard cost method to calculate deductions if you have up to four boarders. If you have
