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  1. #11

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    No matter it is a net rental income or loss, you have to file a IR3 (Income Tax Return) with IR3R (Rental Income Schedule) to IRD annually because the rental activity is taxable. You can claim the mortgage expense along with other expenses (council rates, utilities, insurance, etc.), but the deductions you can claim are based on your actual costs, apportioned based on floor area. In addition, the Ring-fencing policy has been introduced this year, which means you cannot use your rental loss against your other taxable income.

  2. #12
    Join Date
    Oct 2013
    Posts
    1,654

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    Errors in the above.

    If they were classed as boarders (which they are not, in this case) costs can be based on standard cost formulas, and it need not be filed on an IR3 if there is no profit. Just saying, dont *always* have to file the IR4 and IR3R.

    Additionally, I want to say that ringfencing doesnt apply to renting your own home whole you live there. I cant recall why right now, and would need my notes at my desk. But am 95% sure that if flatmate income makes a loss, you CAN deduct against other income, in the same way you can for a mixed use holiday rental, or an AirBnB activity.

  3. #13

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    Thank you for the correction Anthony. Completely forgot the 'main home' thing as I have not filed any return for 2020FY.

  4. #14
    Join Date
    Aug 2003
    Posts
    7,722

    Default

    Quote Originally Posted by Anthonyacat View Post
    Errors in the above.

    Additionally, I want to say that ringfencing doesnt apply to renting your own home whole you live there. I cant recall why right now, and would need my notes at my desk. But am 95% sure that if flatmate income makes a loss, you CAN deduct against other income, in the same way you can for a mixed use holiday rental, or an AirBnB activity.
    This is interesting but I am guessing if the house is in a family trust the loss would be ring-fenced in the Trust and therefore not deducted from 'personal income'. Or are you saying as it's your 'PPOR' whether it's in a Trust or not is irrelevant and the income can be offset against personal income?

    cheers,

    Donna
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  5. #15
    Join Date
    Oct 2013
    Posts
    1,654

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    Starting to become a complex situation now, so a full answer would take a bit of research and a lot more time than I want to put in here now, but if a trust owns a property it will never be able to be offset any loss (rental or otherwise) against personal income. Trusts can't attribute losses. But in some cases these losses could be offset against other trust income (interest, dividends, etc).
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