Should I rent a room out to make money?

Janne is contemplating renting out a room to cover maintenance costs.

room for rent

Janne is contemplating renting out a room in her home to help cover maintenance costs – how will this affect her part Age Pension?

Q. Janne
I am a part age pensioner wanting to rent a room to another person for a nominal amount in order to help pay for maintenance of the property.

Will my part Age Pension be penalised?

A. As you are more than likely aware, Centrelink allows an income-free threshold whereby you can earn up to $168 per fortnight and continue to receive the full Age Pension. Any income above the income-free threshold will reduce your Age Pension by 50 cents in the dollar for a single pensioner and 25 cents in the dollar for each member of a couple.

The income you earn from renting out a room will be assessed and, therefore, could reduce your Age Pension further.

However, when renting out a room, there are deductions you can make to cover costs. You could actually rent out your room and, depending on how much you charge, have no assessable income from this venture.

You should consult Human Services to clarify what it will allow you to deduct from any rent you receive.

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    COMMENTS

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    Nan Norma
    14th Aug 2017
    10:12am
    You don't 'rent' out your spare room. You invite someone to share costs with you. This means sharing the costs of electricity, gas, water etc. etc.. Lots of people live like that already and more will have to as costs increase.
    Pamiea
    14th Aug 2017
    10:29am
    Knowing how the Government screws us why not rent the room and not declare it and screw them back. Never thought I would have this attitude but we are all being screwed by the Government whilst they revel in their high income, benefits and pension. Grossly corrupt!!
    Janran
    14th Aug 2017
    12:04pm
    I feel your outrage, Pamiea, but you will very likely be caught out if you don't declare it.

    If that boarder or lodger is on any type of benefit (pensioner, newstarter, Veteran, single parent, etc.,) then they are already on the Govt. books and will be linked to you.
    They may claim rent assistance, which will lead directly to you.
    If you have a lease agreement or involve the Bond Board in any way, it will lead directly to you.

    The Govt. is very efficient in this regard, unlike corporate or Govt. surveillance. The rich live off the fat of the land while the poor scrimp and save while under the microscope, and doing all the real work that keeps us fed and clean.
    johnp
    14th Aug 2017
    11:13am
    I agree with Pamiea and Nan. Totally OBSCENE that the PM, pollies etc recent salary increase (just the incremental part) was about same as full aged person's pension !!
    sunnyOz
    14th Aug 2017
    1:47pm
    And don't forget their 'living away from home allowance' where they can stay in, and pay off their OWN so-called investment homes (help by partner, or other family member). And that's around $270 PER NIGHT.
    Ian202
    14th Aug 2017
    11:17am
    Centrelink allow you to have a boarder and they only take a portion depending on if meals are supplied. Nan Norma's comment is correct. From the Centrelink Site:

    Income from boarders and lodgers
    This is where someone rents 1 or more rooms in your main home. Only part of what they pay you counts as income. The amount depends on whether any meals are included.

    What they pay for How much counts as income
    Lodging only 70%
    Lodging and breakfast 50%
    Lodging and all meals 20%
    Deductions
    We may count less of this income in the income test if having the lodger costs you more than they paid you. You can show us these costs using your tax return.

    You can also deduct:

    the mortgage interest on your main home, or
    the rent you pay for your main home
    HarrysOpinion
    14th Aug 2017
    11:51am
    Do the deductions also include a percentage of the Council rates including strata rates?
    Pamiea
    14th Aug 2017
    11:59am
    I am as honest to the cent with Centrelink but wish I hadn't been!
    johnp
    14th Aug 2017
    12:20pm
    last time I went to centrelink they brushed me off at the first point within their office so couldnt update my details with them even though I wanted to do the right thing and update them on my changed financial situation. Went online and logged in few times but ended up going around in circles. So its bit of a catch22. Rather "Kafkaesque really !!
    Charlie
    14th Aug 2017
    12:24pm
    Obviously a source of income and treated like any other, Don't know exact amounts but income greater than $250 a fortnight will cause a reduction in pension.
    Triss
    14th Aug 2017
    3:15pm
    It's really annoying if you try to make a little bit of extra money to know that a proportion will taken from you, especially as we the taxpayers, and most of us pay tax, have to fork out for ex politicians' pensions even though the majority of them have a second huge source of income which does not reduce their pensions. In a third world country that would be called corruption, why isn't it called that in Australia?
    KSS
    14th Aug 2017
    12:28pm
    There is another thing to consider: If you rent out a room you need to check that your home and contents insurance actually allows you to do that. Likewise there may be council restrictions too. And if you live in a Strata building there may be by-laws to check too.
    Nan Norma
    14th Aug 2017
    4:18pm
    Centrelink deeming rates are deplorable at the moment. To me government it treating pensioners dishonestly. People that never put money aside and now receive a full pension are better off than those that were careful and saved for their retirement.

    14th Aug 2017
    4:47pm
    I guess rules is rules and declaration is required. The chances of getting caught renting a room are slim but why take that chance when the amount received is greater than the amount received if the room is not let. (Assuming an age pension is involved). I have a friend who tried to dodge notifying Centrelink when they rented part of her home to a friend in need. Things turned pear shaped, an argument ensued and the so called friend dobbed my friend in to Centrelink. Without the benefit of a crystal ball, I think that full disclosure is the way to go.
    Johno
    14th Aug 2017
    5:20pm
    Where did the $168 allowable income a fortnight come from? Surely it's $250 a fortnight or has this just changed?

    14th Aug 2017
    5:52pm
    Shame on those advising Janne not to declare her income.

    It's illegal - theft and fraud

    These are the same people who jump up and down with fake anger and anguish when they get a letter from Centerlink warning them of legal action
    Rosret
    14th Aug 2017
    10:52pm
    It may well be all of those things Raphael however it shouldn't be.

    It would be a much fairer and less likely to cause issues if all Australians were given a base line pension and anything extra you earn or have earned over ones life time if yours to spend how you wish.
    It annoys me that people spend every cent they have and then claim the pension.
    Anonymous
    15th Aug 2017
    12:07am
    Agree
    Everyone gets a pension and taxed over and above a certain income threshold
    Pamiea
    14th Aug 2017
    8:33pm
    Put a sock in it Raphael
    Anonymous
    15th Aug 2017
    12:06am
    Must have hit a nerve

    Perhaps centerlink should have a closer look at your assets and income
    Pamiea
    15th Aug 2017
    12:41am
    I saw Centrelink tda. I am squeaky clean but are we encouraged to be when the politicians aren't? Does Centrelink pay for the inconvenience of having someone in your home while you earn a measly few dollars which by the way won't affect her pension so keep your gear on folks
    Pamiea
    15th Aug 2017
    12:41am
    I saw Centrelink tda. I am squeaky clean but are we encouraged to be when the politicians aren't? Does Centrelink pay for the inconvenience of having someone in your home while you earn a measly few dollars which by the way won't affect her pension so keep your gear on folks
    Anonymous
    15th Aug 2017
    3:22am
    Huh ?
    Sounds like your moral compass is swayed by what you see others do
    Not by what you think is right
    Pamiea
    15th Aug 2017
    9:01am
    Drop dead Raphael. And don't judge someone you don't know. My moral compass is fully intact but you are a bully guts!!!
    Bushlady
    24th Nov 2017
    2:44pm
    I am totally disgusted, that the pensioners league didnt voice anything to do with pensioners in the election. We as older person that have no super.?And rents and food are raised to a high, that is beyond our pension. My partner and I go put late and rade resterant dins. We wre once in the work force as manufacturers. We had no super.


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