Private ruling: Joint ownership of rental property
Published: March 2013
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2010

Ruling: Q1: Is the income and expense of a rental property in which you are a joint owner apportioned according to the ownership interest on the property title? | A1: Yes.

Relevant facts and circumstances: You jointly purchased a property with a second person. The co-owner has not contributed any financial input to the purchase, and you have always solely maintained the mortgage and all costs associated with the property. You have now moved out of the property and commenced renting it. You have declared 100% of the income and expenses from the property in your own tax return.

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

Reasons for decision: Detailed Reasoning - Division of net income or losses between co-owners of rental properties: 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. 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. In your case, you and another person jointly purchased a property. You have a 50 per cent ownership as a joint tenant, with the remaining percentage being held by the co-owner. Even though the co-owner has not contributed financially to either the purchase of, or the continuing management of the property, and has not received any income from it, you both own your rental property as joint tenants, so you each hold an identical 50 per cent legal interest. The net income or loss from the rental of the property must be shared accordingly, unless there is sufficient evidence to establish that your equitable interest is different from this legal interest. As you have not provided any evidence to support that the equitable interest in the dwelling is different from the legal interest, you must include both the rental income received and outgoings spent according to your percentage of ownership as stated in the title deed of the property.