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.
Related articles:
Income and asset tests
Tax implications of renting a room