Renting out an office space under my house

[vice]

Hi all

I have a 35m2 rumpus room under my house which my wife has been using as a studio space, but as she now no longer needs the space for her work I've been thinking of renting it out to a small business as an office space.

My question is what kind of things do I need to consider before advertising? Also- any suggestions what sites/forums are out there to find someone looking for such a space?

The room has aircon, power and a toilet, and I'm assuming any perspective tenants will be happy to make use of my own unlimited adsl. Do you think I would need to supply a seperate phone line to the space or is everyone using voip/moniles these days?

[Nick G]

Good idea. However I'd chat with your insurer first to make sure it can be safely let to a 3rd party for business use and also your accountant about how to structure an entity to run the lease through.

[vice]

Cheers Nick. I had already let my insurer know about my wife's business using it and figured I'd have to see if they are ok with a third party using it. Good idea to talk to my account first though.

[Rosco]

Hi Vice,

First thing that jumps to my mind is council rules and regulations. Can you rent out an office from your home?

If you are breaking council rules by doing this activity, then you might find your insurance answer changes.

Using your broadband - generally you would want it to be completely separate otherwise your security might be breached. Also the business running out of your office might want a seperate connection to ensure they have high security.

From an accounting / tax perspective there isn't much you can do. The owner of the property rents it, receives the income and declares it as income. The owner of the property can claim expenses associated to the tenancy. ie if was 10% of your home could claim 10% of your interest, rates etc.

A dodgy thing I see every now and again - Non working wife returns all rental profit. But house actually owned 50/50 by Husband and wife. Or if a loss, working husband claims all loss.

Complicated and dodgy thing I see sometimes - Husband and Wife own property. Lease to LTC. LTC then on leases to public and makes a big loss. 99% of loss goes to working husband. But if you stand back and look at this, is it dodgy? yes! If you were the LTC would you do this? no, why would you intentionally make a loss and also have no property ownership?

Ross

[PTWhatAGreatForum]

The room has aircon, power and a toilet, and I'm assuming any perspective tenants will be happy to make use of my own unlimited adsl. Do you think I would need to supply a seperate phone line to the space or is everyone using voip/moniles these days?

I use VoIP but if I were to rent it I'd want my own internet connection. I suggest you install an additional phone line which the tenant can connect up.

[vice]

I use VoIP but if I were to rent it I'd want my own internet connection. I suggest you install an additional phone line which the tenant can connect up.

Ok cheers Michael yep that makes sense.

[vice]

Hi Vice,

First thing that jumps to my mind is council rules and regulations. Can you rent out an office from your home?

If you are breaking council rules by doing this activity, then you might find your insurance answer changes.

Hmmn ok fair point, hopefully someone from Auckland (where my house is) who's had specific experience with this could chime in. I guess I should try give the council a ring and see what they say.

Using your broadband - generally you would want it to be completely separate otherwise your security might be breached. Also the business running out of your office might want a seperate connection to ensure they have high security.

Ok yep that makes sense

From an accounting / tax perspective there isn't much you can do. The owner of the property rents it, receives the income and declares it as income. The owner of the property can claim expenses associated to the tenancy. ie if was 10% of your home could claim 10% of your interest, rates etc.

To be honest I didn't think too hard about setting up structures etc, kinda just assumed I could take cash like from a flatmate Can see some advise from my accountant at this point would be a good idea

A dodgy thing I see every now and again - Non working wife returns all rental profit. But house actually owned 50/50 by Husband and wife. Or if a loss, working husband claims all loss.

In my case the property is owned in my name only so not too dodgy there

Complicated and dodgy thing I see sometimes - Husband and Wife own property. Lease to LTC. LTC then on leases to public and makes a big loss. 99% of loss goes to working husband. But if you stand back and look at this, is it dodgy? yes! If you were the LTC would you do this? no, why would you intentionally make a loss and also have no property ownership?

Complicated yes haha! That went a lil over my head there Ross

Ross

Sorry about the poor quote format, hard to do properly on my phone

[Bluecoat]

Sorry about the poor quote format, hard to do properly on my phone

just assumed I could take cash like from a flatmate

haha

Ross you have a lot to answer for