Room Renting for Owner Occupied House

Hi all, I would like to find out more about the owner-occupied property. Hope you guys can help me.

From my understanding, the owner is required to live in the owner-occupied property for at least 12 months. The owner must not rent out the property in the first year.

However, is the owner allowed to rent out the rooms in the first year? How about Airbnb? or any sort of space renting income?


  • The length/duration of a owner-occupier restriction is specified in the caveat (in the contract of sale). It can be any (1, 3, 5, 7…) years, not always 1 year (12 months). Depending on wording of the caveat, but normally, only person(s) whose names are in title and "their immediate family members" can live in the property. Of course, no rent/AirBnb are allowed within the specified period.

    In case of violation, what will be done depends on who set the caveat.

  • Which state? I'm assuming you mean that you are getting First Home Owners Grant. The rules on whether a part of it can be let out depends on the state rules.

    If its just you buying a property under an Owner Occupied loan, that does not matter - just don't tell the bank. You do have to tell the ATO and declare all income. Also you lose CGT protection for the property as it becomes an investment property.

    • Sorry, misunderstood question. This is for one of those land and house package things in an estate that have caveats that it has to be occupied by the owner. Yeah, depends on what the contract says.

      • It is not for the First Home Owners Grant but First Home Owner Occupied hence the benefits are cheaper bank loan interest rate and lower stamp duty. And the state is Queensland

        • +2 votes

          I have an uncle who when you ask him where he lives, his response is, it depends on which bank is asking…..


        Talk to a lawyer about whether that is actually enforceable once you own the property.

  • As long as you don’t claim negative gearing during first year tax time, do whatever you want ;)

    • Don't ATO investigate or spot check?

      • They investigate dodgy tax deductions and claims.
        If you don’t claim it, why would you be flagged ;)

        • what about the 1st home / home concession on stamp duty

          i read that gov track by gov dep mailing document address of anon person living on address that you've claimed for 1st home / home concession on stamp duty

  • You'll need to declare rent received come tax time, even if it is for a room.

    • You are supposed to, but if it is a house mate ‘helping with the bills’ in cash… I suspect there are lots of people doing this. It’s only when the house is formally leased that the rental income is always declared.

      If you own the house and get a new partner who starts paying their share into the mortgage it’s not ‘rent’.

    • payments from a family member for board or lodging are considered to be domestic arrangements and are not rental income. In these situations, you also can't claim income tax deductions.

      Additionally search term 'boarder'

      • that clarifies it a bit better. If you want to claim expenses on tax, you will need to declare the rental income. If you are renting a room or two and declaring income, you will only be able to claim a portion of expenses relative to the portion of the house used by the renter.

      • strictly family member ? what about "gf" / "fwb"

        i know "home stay" is grey area