Private ruling: Beneficial ownership of property
Published: July 2012
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you liable to declare your portion of the income and expenses from your jointly owned rental property? | A1: Yes.


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

Reasons for decision: Summary: Division of net income or losses between co-owners of rental properties Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners refers to the division of net income or loss between joint owners of a rental property. The Ruling only examines the taxation position of co-owners whose activities do not amount to the carrying on of a business. Persons who own one rental property would not be considered to be carrying on a rental property business. According to TR 93/32, the income/loss from the 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. The equitable interest will only be different if one of the owners shown on the title deed is holding their share of the property in trust for the other party. That is, in your case, you would have to show that your ex partner has given up all claims of ownership of his 50% share of the property and is merely holding it in trust for you. Co-ownership Co-owners of a property who are joint tenants of that property will hold identical legal interests in the property. That is, their interest must be the same in extent, nature and duration - each owns an identical 50% share in a property. You and your partner separated and the ex-partner has not contributed to the expenses of the rental property except for a share of rates and loan repayments. This does not alter the fact that your ex-partner is a joint owner both legally (there has been no change to the title deed) and beneficially (there is no indication that they have given up ownership of their 50% share of the property). Until your legal or equitable interest in the property changes, (for example, if title passes to you or your ex partner gives up ownership of his 50% share of the property and creates a trust to hold it for your benefit), the income and expenses of the property must be split equally between you and your ex partner, the joint owners.

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 jointly own a rental property with your ex partner | The loan for the property is in both names and both owners contribute to the loan. | Your ex-partner now resides in an adjoining property which you built, and over 12 months ago the e-partner handed the jointly owned property to you, which you have rented out while you live elsewhere. It has been tenanted since this time. | From the date the property was rented out, you have received all rental income. | The property is managed by an agent who determined the rent at market rate. | You have been paying all expenses (except for some loan repayments and 50% of the rates) including repairs, letting fees and land tax. | You have claimed 50% of the expenses and declared 50% of the property income in the 2010-11 tax year.