Private ruling: Rental income and expenses
Published: September 2011
Ruling period: Year ended 30 June 2011 | Year ending 30 June 2012
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to claim 100% of the income and deductions from your co-owned rental property? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Section 8-1.

Reasons for decision: Summary: Rental income and expenses must be attributed to each co-owner according to their legal interest in the property. As you do not own 100% of the property, you cannot declare 100% of the income and claim 100% of the deductions in relation to the property. | Detailed Reasoning - Detailed reasoning: Taxation Ruling TR 93/32 explains that the net loss or income from a rental property must be shared according to the legal interest of the owners, except in those very limited circumstances where there is sufficient evidence to establish that the equitable interest is different from the legal title. An example of where the equitable interest may differ from the legal interest is when an owner is holding their share as trustee for the other owner. A Family Court order dealing with settlement of jointly owned property may also alter this equitable interest. A person's legal interest in a property is determined by the legal title to that property under the land legislation in the State or Territory in which the property is situated. The legal owner of the property is recorded on the title deed for the property issued under that legislation. Rental income and expenses must be attributed to each co-owner according to their legal interest in the property, despite any agreement between the co-owners, either oral or in writing stating otherwise. Where a co-owner forgoes their share of the rental income and/or pays for all the expenses this is considered to be a private arrangement between the co-owners. It does not alter the fact that they are legally entitled to their share of the income and liable for their share of the expenses. In your case you and your partner have purchased a property together. The property is now being rented. You are receiving all the income. You are paying for all the expenses as your partner is unable to contribute to the payment of the expenses. In your case we are not able to conclude that the equitable interest in the ownership of the property is different from the legal title. Therefore, you must declare the income and claim the deductions with respect to the property in proportion with your legal interest in the property.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You and your partner purchased a property together. | You and your partner are no longer living together and the property is now being rented. | You are receiving all of the rental income. | You have to pay all the expenses regarding the property yourself as your former partner is unable to contribute to the payment of the expenses.