Can You Rent Out Part of Your House?

28 May 2024

Renting out part of your house is a feasible option in New Zealand, and it can be a great way to generate extra income. Here are some key points to consider:

Legal Considerations

Tenancy Agreements:

If you rent out a room in your main home where you also live, the person renting the room is typically considered a flatmate rather than a tenant. Flatmates are not covered by the Residential Tenancies Act (RTA), which means you have more flexibility but also less legal protection. It’s advisable to have a written house-sharing agreement to outline expectations and rules.

Income Tax:

Income earned from renting out part of your home is generally taxable. You must declare this income and may be able to deduct related expenses such as a portion of your mortgage interest, taxes, and maintenance costs. For short-term rentals, like those on Airbnb, you may also have to consider GST if your annual turnover exceeds $60,000.

Setting Up Your Space

Preparing the Space:

Whether you are renting out a room or a larger part of your house, ensure the space is clean, well-maintained, and furnished appropriately. Providing amenities such as Wi-Fi, clean linens, and basic kitchen supplies can make your space more attractive to potential renters.

Listing Your Space:

If you are using homestay platforms like Airbnb, create a detailed and honest listing. Include high-quality photos and informative descriptions of the space and its amenities. Make sure to clearly state what areas are available to guests and any house rules they need to follow.

Managing Renters

Finding Suitable Renters:

Screen potential renters carefully. Conduct interviews and ask for references from previous landlords or employers to ensure they will be a good fit for your living situation. It’s important to discuss their lifestyle and habits to avoid any potential conflicts.

Insurance:

Check your home insurance policy to see if it covers damage caused by paying guests. Some policies might not cover rental activities, or they may require additional coverage.

Advantages:

Extra Income:

Renting out part of your home can provide a significant boost to your income.

Flexibility:

You can choose when and how often to rent out your space.

Meeting New People:

Hosting guests can be a social and rewarding experience.

Disadvantages:

Privacy:

Sharing your home with others can impact your privacy.

Maintenance:

Increased wear and tear on your property may require more frequent maintenance.

Responsibility:

Managing renters and ensuring the space is always guest-ready can be time-consuming.

FAQs