With the rising popularity of websites such as Airbnb, Stayz and other short term accommodation providers gaining traction more and more people are looking at using their home or investment property as a way of earning income through temporary or short stay accommodation.
If you are thinking of putting your house or spare room up on one of these sites here are 5 things you should think about before doing so:
- Check your council laws. Depending on where your property is located you may need to get approval from your local council before using your property for short term accommodation. You need to consider the impact that having other people stay at your house may have on your neighbours and the surrounding areas. As such where there will be increased vehicle traffic or people coming and going at all hours on a regular basis you may need to get approval from your local council as to whether they have rules and regulations on short term rental requirements. Additionally you may find that there are health, safety and fire obligations to consider as a result of renting your home out to third parties.
- Do you have the proper insurances? Is renting your home out permitted by your home insurance policy? If not, you may find that your house is uninsured if you were ever to make a claim on your home insurance policy. Additionally, you may need to get public liability cover to ensure that you are protected in the event that somebody was to injure themselves whilst on your property. Have you considered what the impact may be to your property if the person staying there leaves it in a less than desirable condition and what costs will be associated with cleaning up any such mess?
- Declare any money to the ATO. If you earn any income from renting your spare room or property out this is income that you have earnt and it needs to be declared to the ATO. You may also find that as a result of earning this income that you are able to claim further deductions but it is important that you first declare the income before looking to apply any deductions. Additionally you need to consider whether renting your spare bedroom will give rise to capital gains tax (“CGT”) consequences when you sell your home. Usually the home that you live in is CGT free. Meaning that you don’t need to pay capital gains tax when you sell your family home however if you rent out your family home or the spare bedroom you may find that the ATO view your property differently and you may face a tax bill.
- Are you renting the property? It may seem like a great idea to use that spare bedroom in the property that you are renting, however are there provisions in your lease relating to the further sub-lease of the property? There has been a court case in Victoria looking at this direct issue and whether putting the property up on AIR BNB constituted a sub-let of the property and was a breach of the lease.
- Ensure your belongings are secure. Whether offering a room or the whole of the property, if you have items of value in the property it is important to consider whether these are securely held or whether you want them to be available for use by the person staying at your property. Theft can be an issue and as such it is a good idea to either get a security deposit to ensure that your items can be replaced if stolen or removed or properly secure any valuables you have.
If you have any concerns about any of these issues please don’t hesitate to make an appointment to discuss your legal rights and obligations with us.
About the author:
This article has been authored by Jacqueline Brown who is a Perth lawyer and director at Lynn & Brown Lawyers. Jacqui has over 20 years’ experience in legal practice and practices in family law, mediation and estate planning. Jacqui is also a Nationally Accredited Mediator and a Notary Public.