Over seven million spare bedrooms sit empty each night in Australia. That’s a lot of lost income.
This is amazing. Around 85% of home owners have a spare room at their place, and while most of us reserve it for Grandma’s annual visit or extra storage, some canny home owners are renting out their spare rooms. And according to Choice, it seems those short term guests could fill your pocket with an extra $30,000 in annual income.
With this sort of cash up for grabs it can be tempting to make your spare room available to travellers and other paying guests by listing on sites like Airbnb or Stayz. But along with the upside of earning extra cash, there are issues to be aware of before using your spare room as a money spinner.
Weigh up the downsides
For some home owners, the idea of inviting strangers into your home is a chance to meet people and form new friendships. Others may be less comfortable with the idea, after all our homes are a private sanctuary. The chances of Hannibal Lecter turning up on your doorstep may be slim but you need to be comfortable about unfamiliar faces sharing your home.
Check you’re insured
Offering your home for short term lettings can come with insurance issues. It’s important to check if regular home insurance policies provide protection if the home owner finds themselves embroiled in any sort of legal action.
One in two Australian share home hosts don’t know if their activities are covered by insurance according to IAG, but it’s something worth checking out before your guests check in.
Your home may no longer be tax-free
The other factor to weigh up is that our homes are a tax-free asset. This can change if you start making money from the property, and you could be up for capital gains tax on at least part of the profit if you sell your home at some stage. Your tax adviser can provide details for your situation.
If the idea of opening your home to paying guests ticks all the boxes so far, you might also want to run any plans to offer short term accommodation past your local council. You may need to meet requirements for parking, signage and even noise limits depending on your area.
Find out more about the pros and cons of offering your home to holiday makers.
Have you rented out your spare room? Share your experience with us in the comments below.