Gold Coasters renting rooms during the Commonwealth Games have been warned of dangers

GOLD Coasters looking to skip town and avoid the congestion of the Commonwealth Games and score a neat little profit on the side by renting out their homes — beware.

Beware of insurance problems and tax worries if you’re renting out your property during the Commonwealth Games.

GOLD Coasters looking to skip town and avoid the congestion of the Commonwealth Games and score a neat little profit on the side by renting out their homes — beware.

According to a local lawyer homeowners may need to take out their magnifying glasses and check the fine print on their insurance policies before they let guests into their homes.

Adding to the situation ahead of the games the Australian Taxation Office is warning Gold Coasters looking to use accommodation sharing services to ensure they understand their tax obligations.

Gold Coast injury compensation law expert Bruce Simmonds said while most homeowners’ household insurance policies included some liability cover for visitors or tradesmen who may have an accident on the property, this may not be the case where a property is being rented out.

He said the simplest option was for anyone renting out their home to check first with their insurer that they were covered.

“There has been energetic promotion of the concept of locals renting their homes to visitors for big money,” he said.

“However people may not realise their home insurance may not automatically cover them if someone is injured on the property.”

Mr Simmonds said for example homeowners were advised to get a WorkCover insurance policy to protect themselves against possible claims from tradesmen who might be injured while working on a property.

“It’s possible household insurance might not cover you for people like gardeners, electricians and pool service people who could be classified as employees under WorkCover legislation,” he said.

“How insurers would view a residential property rented out for a specific event needs to be checked because there’s the risk a claim could be refused.”

ATO deputy commissioner for small business Deborah Jenkins said the most important thing for Gold Coasters renting out their homes to remember was that all income earned from renting out all or part of a property needed to be declared.

“It doesn’t matter if it’s only for one week of the year, or a few weeks here and there, every dollar needs to be declared,” Ms Jenkins said.

“We know that most people try to do the right thing but we are concerned that some people don’t understand their obligations. Unfortunately there are a few who know what their obligations are but seek to avoid them. As the community would expect, we have them in our sights.

“The ATO collects information from a range of sources, including banks, other government agencies and suppliers and other third parties. We also get information about purchases of major items, such as cars and real property, and have the ability to compare this information against income and expenditure that taxpayers report to us.

“We are currently working with third parties in the accommodation sharing sector to provide greater visibility around these issues and to assist us in compliance activities.”

However, Ms Jenkins said it wasn’t just income that was a concern with Gold Coasters needing to be aware of the Capital gains Tax impacts their decision could have.

“Just like running a business from home, once income is earned from a primary place of residence there are Capital Gains Tax (CGT) implications,” she said.

“It is possible that if a property significantly increases in value, the amount of CGT owed may even be higher than the amount of income received.

The ATO encourages anyone considering renting out part or all of their primary residence to seek independent advice about the tax implications.