(Plus get Free Resources at end of this post)
Hereโs the key and a simple three-step process:
๐ง๐ต๐ฒ ๐๐ฒ๐
๐ Income from boarders is exempt up to the amount of ‘standard-cost’.
If you meet the criteria, not only do you avoid paying tax, but you also do not need to file a tax return.
This $0 tax method applies when you rent out your home – even if you are a tenant and do not own the property.
Here is the three step process:
๐ผ๐ฆ๐๐ฒ๐ฝ ๐ญ: ๐จ๐ป๐ฑ๐ฒ๐ฟ๐๐๐ฎ๐ป๐ฑ ๐๐ต๐ฒ ๐๐๐ผ ๐ธ๐ฒ๐ ๐๐ฒ๐ฟ๐บ๐: ๐๐ผ๐ฎ๐ฟ๐ฑ๐ฒ๐ฟ ๐ฎ๐ป๐ฑ ๐ฆ๐๐ฎ๐ป๐ฑ๐ฎ๐ฟ๐ฑ-๐๐ผ๐๐
๐ Who is a Boarder?
As per the IRD, โA boarder or home-stay student rents a room in a private home. They get meals and other care and services as part of their rent. They are different to flatmates.โ
๐ What is Standard Cost?
This is IRDโs way of recognising the expenses of providing accommodation. It includes three parts.
1. Weekly Standard Costs: A rate set by the IRD each year (currently $231 per boarder, up to 4 boarders). This represents the direct day-to-day expenses involved in having boarders.
2. Annual Housing Standard Costs: These are costs of the boarder using your home. The costs vary based on your situation if you are a tenant or a home-owner. A formula takes into account either your rent if you are a tenant, or if you own the property – then costs such as mortgage interest, insurance and rates.
3. Annual Transport Standard Costs: This represents your motor vehicle costs for providing transport to your boarder. It takes into account fuel, insurance, registration, WOF, repairs and maintenance. You can use the IRD Kilometre rates or choose to claim the actual vehicle costs.
Now, let’s apply this:
โ
If you have 4 boarders throughout the year, multiply 4 boarders by 52 weeks and the $231 rate. You can get up to $48,000 of exempt income for the year. I haven’t even taken into account any annual housing costs and annual transport costs here.
๐ผ ๐ฆ๐๐ฒ๐ฝ 2: Check your eligibility
Since this is generalised and broad-based information that Iโve given you, its important for you to find out if you are eligible to use this method based on your situation. This is where Step 3 comes in.
๐ผ Step 3: Download 3 FREE resources to guide you.
โ
Online IRD calculator to check eligibility (takes only 10 minutes).
โ
IRD’s own worksheet – to help you calculate everything easily.
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FAQs, Fact-Sheets, Decision Making Flowchart – 50 pages of IRD source material for reference.
Iโve gathered all this in one place for easy reference, so you donโt have to search for it on the IRD website.
Download the free resources here (email required – I promise I won’t spam!)
https://lnkd.in/gg9hxEj4
