For first home buyers in Queensland, there’s been some very good news in the property arena recently. This means that 2025 is shaping up to be a year of exciting opportunities. One of these is that recent changes to Queensland’s policies for first home buyers means you can now rent out a room in your home within the first 12 months of purchase and still stay eligible for concessional stamp duty.
This new flexibility could have an impact on your finances in the first crucial year of home ownership. Here’s what we know.
We’ve often been asked whether it’s OK for first home buyers to rent out a room in their house. It’s a great idea – a way to make a little income and provide affordable housing to others during a tight housing market. But unfortunately, first home buyers who did so in the first 12 months would have found themselves in a sticky situation.
Before the legislative changes, Queensland’s concessional stamp duty rules required first home buyers to live in their property as their primary residence, and prohibited them from renting out any part of their home within the first 12 months. If they did decide to rent out any part of their home, the buyers would not qualify for concessional stamp duty.
This was not an ideal result. Home concession rates reduce the amount that buyers pay in stamp duty (also known as transfer duty) and can be a huge savings for first home buyers. But you couldn’t then use the property to rent out. Now buyers can have both.
Prior to the recent state election, the LNP made a promise to lift the rule banning first home buyers from claiming stamp duty concessions while renting out a room. Then the Labor government went ahead and changed the rule. These new changes will expire in June next year. But the LNP has said they’ll make the change permanent.
So if you’re wondering whether you can rent a room out in your home, the answer is definitely yes, and with no risk to your stamp duty concessions!
So what are the financial impacts of this change? While in the first year of home ownership, it’s unlikely to change your borrowing capacity, it does have the potential to help your financial position overall.
The first year of home ownership can be financially demanding. Between mortgage repayments, utility bills, upkeep of the home and even necessary renovations or fixes, it’s easy to feel stretched. Renting out a room can be a great solution.
When you rent out a room you can generate additional income, which acts as a buffer to cover your living expenses, and build some ease into those first couple of years. You’ll get some peace of mind while you’re adjusting to your new financial situation.
Once you’ve got your feet under you, it’s a great idea to set up a budget that allows you to direct your extra rental income into repayments on your home loan. If you can do this, you’ll reduce your loan balance faster.
Even small additional repayments can make a big difference in the long run, particularly when it comes to interest payments. For example, depending on your loan amount and interest rate, if you make an extra repayment of $100 per month, you could save over $30,000 in interest and take two years off your loan term.
It goes without saying, but one of the biggest benefits of paying off your loan faster is that you will own your home faster. Only about 30% of Aussies own their homes without a mortgage, and this would certainly set you up for a strong financial future.
Life is tricky. Just when you think you’ve got everything sorted, it throws up something new for you to contend with – whether it’s an illness, a divorce or a needed renovation. The extra income from renting out your home can be used to build a savings buffer for future home-related expenses, such as maintenance, renovations or unexpected repairs. This means you’ll be prepared for whatever comes your way.
Renting out a room can be financially beneficial – but it’s important that you approach it thoughtfully. Here are some practical considerations to keep in mind:
Rental income is considered taxable. You will need to declare it in your annual tax return, and you may be able to claim some deductions. Definitely consult with your tax professional to make sure that you’re maximising your benefits and staying compliant with the tax laws.
Research the rental prices in your area to make sure you’re setting a fair rate for the room you’re offering. You’ll want to look at factors like the size of the room, access to amenities and the condition/newness of the property.
You’ll definitely want to speak to a lawyer about putting a rental agreement into place. And to make sure that you understand your rights and obligations, as well as the rights and obligations of your tenant. A clear rental agreement can help set boundaries and avoid misunderstandings.
Talk to your insurance provider about your home insurance. You’ll need to make sure your covered for situations involving tenants and their belongings. You’ll likely need to update your policy to reflect your new arrangements.
Renting out a room as a first home buyer is a great option – but it might not be the right fit for everyone. If you’re unsure if this approach aligns with your needs, get advice from your expert team – your mortgage broker (that’s us!), financial advisors, tax advisors and lawyers can all help.
As Brisbane’s most trusted mortgage brokers, we’re here to help you navigate the complexities of home ownership and financing, including whether renting out space in your home is the right approach for your unique situation. Get in touch with the Stapleton Finance team today.
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