Private ruling: Rental property income and expenses
Published: October 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Can you declare 100% income produced from your rental property and claim 100% or the expenses relating to it? | A1: No.


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

Reasons for decision: Summary: Co-owners of rental property generally hold the property as joint tenants or tenants in common. The income and loss from a rental property must be shared in the proportion of ownership. Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners , states that the net income or loss 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. A person's legal interest in a property is determined by the legal title to that property under the land law legislation in the State or Territory in which the property is situated. The legal owner of the property is recorded on the title deeds for the property issued under that legislation. While we accept that you have received 100% of the income and paid 100% of the expenses relating to the property because your spouse did not contribute, this does not mean that the equitable interest in the properties is different from the legal interest. Therefore, you are only entitled to include both the rental income received and expenses incurred according to your percentage of ownership as stated in the title deed of the property.

Relevant facts: You and your spouse jointly own a rental property. | You and your spouse separated. | You are receiving 100% of the income from the property and are paying 100% of the expenses relating to it. | You have not yet obtained a court order relating to the property and the title is still in joint names.