Your Money, Your Wealth, Your Estate

Jacqueline Hodges

Six ways to earn income from your home

If you are a property owner, you can be almost guaranteed that your personal wealth has grown over the last twelve months. Property prices are trending upwards and economists say that this trend will continue at least for the short-term. With property prices soaring you might be wondering how you can tap into this wealth. You might wonder If now the right time to sell your property or to downsize. You might have considered other ways to make money from your property. Shortterm accommodation and permanent rentals can yield a nice little profit.

So, in this article I will look at some of the various ways you can make money from residential property. We will look Australia’s biggest tax advantage - sale of the family home, just what is downsizing and how it works, negative gearing versus positive gearing and why positive is always better, permanent rental, shortterm accommodation, homestay, and tax structuring for investments.

1. Selling the Family Home

It has long been the dream of every Australian to own their own home. Just what is a home? For some a home will be a large family house with a big backyard where the children to play, for some it will be a quiet town house with a peaceful and private courtyard, for some it will be a superb inner city unit where it is all happening, and for others it might be a tiny home and a larger block where they can enjoy an off-grid lifestyle. If you are thinking about selling your home and given the fantastic value at present this might be a good option, then you might be in for a tax free gain. Special rules in the Australian tax law apply to the family home, exempting any gain on your home from tax. However, there are conditions.

If you have always lived in your home and have never used it for income producing purposes such as renting a room, listing on Airbnb, or run a business from home, then you are in for the full windfall. But if you have used your home you may need to apportion that gain between income producing and non-income producing periods. You will need to pay tax on the portion that relates to the income producing period. What if I have only rented the house out for a short time, while I lived somewhere else? Well, there is another exemption, with provisos. If you leave your home to live in another place that you do not own, and you rent your

Speak with Your Financial Adviser

Now these strategies are not for everyone, you might just want your home to remain that, your home for life and that is quite alright. But after reading this article you will have a little more understanding about your option. And if you are thinking for selling or even preparing for your future, please seek professional advice from your tax adviser and your financial adviser.

The best time to start was yesterday. The next best time is now. – Unknown

Jacqueline Hodges is a Chartered Accountant, Registered Tax Agent and SMSF Auditor. She is a Financial Adviser and an authorised representative of Wealth Today. She has a wealth of experience having worked in the financial services sector for most of her career. Jacqueline is a firm believer in continuing education and holds a Bachelor of Commerce (UQ), a Master of Taxation (UM), and a Financial Planning Certificate. She established her own accounting firm servicing individuals and small businesses in 2005 and complemented the business in 2015 with the opening of the financial advice division.

Disclaimer: The information contained in this article is general in nature and may not be relevant to your personal circumstance and needs. Taxation, legal and other matters referred to in this article are of a general nature only and are based on laws existing at the time and should not be relied upon in place of appropriate professional advice. We recommend that you assess whether the information is appropriate to your needs and if appropriate speak with a financial adviser to discuss your needs, financial situation and investment objectives. HQ Wealth Pty Ltd as trustee for HQ Wealth (CAR 1238791) and Jacqueline Hodges (AR 1238790) are Authorised Representatives of Wealth Today Pty Ltd (ABN 62 133 393 263), AFSL 340289.