If you’ve recently purchased your own home but still have a few empty rooms—maybe you don’t have a family yet, or you’re just starting out as a young couple—those unused spaces might be quietly costing you money. But what if they could help you make money instead?

At Fivesting, we believe in making your assets work as hard as you do. And when it comes to your home, renting out a part of it can be a simple but powerful financial move. After all, if your asset isn’t working for you, you’re the one working harder than you need to.

The Benefits: Passive Income, Lower Bills, and Mortgage Relief

The most obvious benefit is financial: by renting out a spare room, you create a stream of passive income. This can go directly towards your mortgage repayments, helping you build equity faster. Plus, if you and your tenant agree to split utilities like internet, electricity, water, and gas, you’ll be reducing your monthly costs even further.

For many homeowners, this extra cash flow makes a noticeable difference, particularly in the early years of a mortgage when every dollar counts.

What About the Downsides?

Of course, there are trade-offs. The most immediate one is privacy—you’re now sharing your space with someone else. That can be a big adjustment, especially if you value solitude. However, if you choose someone you already know and get along with, the experience can be far more positive.

Another important consideration is tax implications. When you use part of your home to generate income, that portion of your property may not be fully covered by the main residence exemption when you sell. This exemption usually allows homeowners to avoid paying capital gains tax (CGT) on the sale of their primary residence. But if part of the property has been used to earn assessable income, like renting out a room, that exemption gets reduced proportionally.

This means that years down the line, when you sell your home, you could owe CGT on part of the gain—potentially a significant amount. The key is to understand and manage this upfront with good record-keeping and advice from a tax professional.

A Powerful Strategy: The 6-Year Rule

For those who take this a step further and move out entirely while renting out their whole home, the 6-year rule becomes a valuable tool.

In simple terms, the 6-year rule allows you to treat your original home as your main residence for up to six years after you’ve moved out, as long as you don’t treat another property as your main residence during that period. That means you can:

• Rent out your entire home.
• Claim expenses like interest, maintenance, and depreciation.
• Still avoid CGT for up to six years, even though you’re generating rental income.

This strategy can be a smart way to maximise tax benefits while continuing to grow your property wealth—especially if you’re temporarily relocating or testing out a new area before committing to a long-term move.

Your Strategy Can Evolve Over Time

As your life changes, so can your housing strategy. Eventually, when your family grows or your lifestyle shifts, you may decide to stop renting out parts of your home altogether. The beauty of this approach is its flexibility—you’re not locked into it forever.

Final Thoughts: Make Your Home Work for You

If you can tolerate a little less privacy and enjoy the idea of shared space—or simply want to fast-track your financial goals—renting out part of your home could be the edge you need. It’s not just about surviving your mortgage; it’s about building savings, investing with purpose, and reaching financial independence faster.

As always, every decision has pros and cons. But if you do it smartly, your home can be more than just a place to live—it can be a powerful part of your wealth-building plan.

Disclaimer: This blog is for general information only and does not constitute financial or tax advice. The tax implications of renting out part of your home can be complex and may vary based on your individual circumstances. We recommend consulting a qualified tax advisor or accountant to understand how this strategy applies to you.