Nila Sweeney

Q. I bought a house in Queensland and received the first home owner's grant. I am currently living in it; however, I would like to start renting it out to students after six months. I am planning to fully furnish it, however I am not sure whether I would be able to claim those expenses on tax. Would I need to convert it into an investment property and what is involved in doing so?

A. With regards to the first home owners grant, if your house has been your principal place of residence for at least six months, there is no requirement to refund the $7,000 First Home Owners Grant.

Simon Tennent, executive director of housing and economics for the Housing Industry Association, advises homeowners to inform their bank and insurers about the new arrangements before converting their home from their place of residence to an investment property.

"From a tax point of view, you will need to declare all income from rent in your next tax return; however you are entitled to some deductions," says Tennent. "Even though the purchase of furniture is not tax deductible, as a home owner, you will be allowed to claim depreciation on these items along with the fixtures and fittings within your home."

"You will need to pay land tax on the home, however this is tax deductible along with council rates, utilities charges, repairs, property management fees, insurance and interest on your loan are fully tax deductible," adds Tennent.

Related: Home Loan Calculator

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker