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AUSSIES don’t need to be property investors to generate an income from real estate.
Your own home can be a handy money spinner if you are prepared to think outside the box – but chasing cash comes with extra risks and responsibilities.
The simplest strategy can be putting a roof over someone else’s head, whether through short-term accommodation websites such as airbnb or as a boarding house for overseas students.
Students often pay about $200 a week for full board, says real estate author and university lecturer Peter Koulizos. But if you load your property with too many students, occupational health and safety rules are likely to come into play, he says.
Inner city and near city homes with a bit of land can become carparks for CBD workers, delivering a steady income.
Tax time offers income potential through home office deductions. More people are taking work home and often can claim a deduction for a portion of their energy costs, furniture, phone and internet use.
The biggest income gain from your home can be from shaving off part of it. However, subdividing blocks is controversial in some areas, and there may be tough rules set by local councils, so tread carefully.
“It can generate a lot of money – tens to hundreds of thousands of dollars,” Koulizos says.
WBP Property Group CEO Greville Pabst says people need to be careful about generating an income from their principal place of residence as there may be tax ramifications.
The family home is generally free of capital gains tax (CGT), but if it becomes an income earner and you start claiming deductions for things such as mortgage payments, it’s likely CGT will apply to part of the eventual sale.
“The moment you generate income from the property, it takes on another life,” Pabst says.
He says subdividing and redeveloping properties has become popular among homeowners with corner blocks and properties with wide frontages or front and rear access.
It’s vital to get advice from architects and planning consultants before acting.
“Many people rush into it, but you should stand back and do a feasibility study to see what the profit margin is. You can lose money if you don’t know what you’re doing,” Pabst says.
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