Rent received from Family members

[jace the ace]

What are the tax requirements when renting a dwelling to a family member.
A freind has a home & granny flat.He lives in the main house and his mother lives in the Granny Flat and pays rent.
Is this treated like a normal rental where income & expenses are declared in your tax return,or are their different rules for family members.
His mother pays market value rent in this instance.

[TheLiberalLeft]

As long as it's market value, you're fine. Rules as normal apply. The IRD is interested in people who claim loads of normal expenses but charge mates rates to family living there. That is my understanding, anyway.

[jedimaster]

Liberalleft is right. Market value is no problem.

If it is at below market value IRD can deem the tenant to have paid and the landlord to have received a market rent under section GC 5 (I think?) of the ITA.

[Tan]

Expenses are only claimable on the granny flat.

[jace the ace]

I'm aware that renting to the family member with everything at arms length including market value rent is acceptable.
My question was more about do you have to declare the rent if your mother(or other family member) lives in your granny flat and pays rent.

[Tan]

It is the same as anyone else living there unless it is board.

[spaceman]

It all depends ..... is the mother a tenant or a boarder???

The standard-cost method uses an average price for basics such as the cost of food, heating, power and transport. The amount is an average across the country and is inflation-adjusted annually.
If your income from boarders is less than the standard cost allowed, you will not have to file a tax return, keep records of related expenditure, or pay tax.
For the year ended 31 March 2010

The standard cost is...
one or two boarders $232 a week for each boarder.
three or four boarders $232 each for the first two boarders, and
$189 for each subsequent boarder.
The current year's rates (year ended 31 March 2010) will be inflation adjusted after 1 April 2011.

If she is a boarder and is paying less than $232/week then you don't have to declare the rent.


If she's a tenant or paying more then you do.



Cheers
Spacemsn

[ChrisD]

Sounds more like a boarder to me - I don't think you need to declare anything.

[Perry]

She is a family member. Any board money paid by
a family member is not income for tax purposes.
However, no expenses are deductible, as has
been observed.

[spaceman]

^ O RLY???

Got any link or quote to back that up????

Cheers
Spaceman