Private ruling: Property ownership
Published: February 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Can you claim 100% of the income and expenses for a jointly owned rental property? | A1: Yes


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

Reasons for decision: Summary: The income/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. In your case, you have provided Consent Orders made under the Family Law Act 1975 stating that from July 2012, you shall be solely entitled to the whole of the beneficial ownership of a jointly owned rental property and that in accordance with full beneficial ownership, you shall be entitled to receive all income, and be liable for payment of all outgoings, with respect to this property. It is accepted that from July 2012, your equitable interest is different from your legal interest in the property. You are therefore entitled to declare all the income and claim all the allowable deductions in respect of the rental property from July 2012.

Relevant facts: You jointly own a rental property with your ex- partner. | Due to serious financial difficulty your ex-partner was unable to service the loan on the property. | For this reason Consent orders were drawn up and a binding financial agreement was entered into. Stating that from July 2012, your ex-partner would be relieved of any and all financial burden with regards to the property and subsequently transfer any rights, interest and responsibility in the property to yourself. | The orders also stated that you work towards re-financing the property as soon as possible to release the current mortgage in both names and the property transferred solely to you. | In accordance with the orders the property has since been refinanced and the legal tittle is now held solely in your name.