A friend of mine is in the process of purchasing a 4 bedroom house, and is planning to rent out 3 of the rooms to help pay the mortgage. IR246 says that you can claim a percentage of your total property expenses against your rental income. (I've quoted the section of IR246 below). Mortgage interest will be approximately 450pw, and rent from 3 of the rooms will be about 410pw.
Does anyone else have experience doing this? If the property is owned in his own name and his rental expenses are larger than his rental income, can he claim the loss against his salary income, or is the loss carried forward to be offset against future rental income.
If the house has a floor area of 150m2 and his room is 15m2 and the rest of the house is either bedrooms rented by flatmates or common use area, does that mean that the "area of the rented out part" is 90%?
Does anyone else have experience doing this? If the property is owned in his own name and his rental expenses are larger than his rental income, can he claim the loss against his salary income, or is the loss carried forward to be offset against future rental income.
If the house has a floor area of 150m2 and his room is 15m2 and the rest of the house is either bedrooms rented by flatmates or common use area, does that mean that the "area of the rented out part" is 90%?
Originally posted by IR246 Part 3 Page 44 http://www.ird.govt.nz/resources/1/e/1efe4c804bbe591281ffd1bc87554a30/ir264.pdf
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