Loading
This thread is archived and the information may not be up-to-date. You can't reply to this thread.
RVPklutz(Newbie)Newbie
15 June 2023

Purchased fathers property (market price) as an investment after his divorce for him to keep living in accommodation, he doesn't have any other assets and on pension. We rent his property at a lower rate than market to help him live. Are we taxed at the rent rate received or are we taxed at area market rate. The property is in an area where some properties sell 350k - 800k so the rent varies greatly and hence is disproportionately higher than we receive as income. Thanks for your advice.

2,182 views
4 replies
2,182 views
4 replies

Most helpful response

Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
16 June 2023

We rent his property at a lower rate than market to help him live.


Assuming that you mean rented back to him ?


Are we taxed at the rent rate received or are we taxed at area market rate.


Actual rent less expenses - but if this is a loss, then expenses are limited to rent received because rented to relative at less than market.


All replies

Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
16 June 2023

We rent his property at a lower rate than market to help him live.


Assuming that you mean rented back to him ?


Are we taxed at the rent rate received or are we taxed at area market rate.


Actual rent less expenses - but if this is a loss, then expenses are limited to rent received because rented to relative at less than market.


Liked by RVPklutz
RVPklutz(Newbie)Newbie
19 June 2023

Thanks Bruce4Tax, Yes rented back to him. So if our interest payments etc are of the same or less than we have received in income rent we submit the actual rent payments received as how I understand your reply but if our expenses are more, then the area avg could be a better net result. Previously advised by tax agent to submit area avg as income but this is nearly 40% less than received and paying tax on non received income seems ludicrous.

Bruce4Tax(Taxicorn)Taxicorn
20 June 2023

Previously advised by tax agent to submit area avg as income but this is nearly 40% less than received and paying tax on non received income seems ludicrous


Agree - there is no law to support area average rent.


Liked by RVPklutz
Peter_Clyne(Superuser)Superuser
22 June 2023

@Bruce4Tax

Respectfully, I'm unable to agree.

In the ATO guide to Rental Properties there's an example that suggests deductions cannot exceed the income, where the rental income has been discounted.

IMHO this is overly simplistic and misleading. Just dumbed down ATO propaganda.

Tax Ruling IT 2167 might be closer to the correct position. Kowal's case might also be helpful.

Example :

Say I have a negatively geared investment property, and I rent it for 52 weeks to my elderly parents.

I give the parents a 20% discount, because there's no need for an agent, and my dad helps with maintenance too. He was a good tradie in his day.

IMHO I should discount my expenses by the same 20% to calculate my deductions.

I'm still entitled to some negative gearing, just 80% of what it would have been in the absence of discounted rent.

Why is this not the correct logical conclusion ?

Liked by RVPklutz and Peter_Clyne

Featured articles

Renting out all or part of your home? What to include in your tax return

21 May 2026 · 4 min read time

How to work out your tax residency

15 Apr 2026 · 8 min read time

Top liked users

  1. Taxduck

    (Taxicorn)

    1385 likes

  2. Bruce4Tax

    (Taxicorn)

    976 likes

  3. YellowPotato

    (Taxicorn)

    384 likes

  4. Ken_Oath

    (Master)

    199 likes

  5. knaresbro

    (Devotee)

    141 likes

Top contributors

  1. Taxduck

    (Taxicorn)

    3003contributions

  2. Bruce4Tax

    (Taxicorn)

    2852contributions

  3. YellowPotato

    (Taxicorn)

    1014contributions

  4. knaresbro

    (Devotee)

    293contributions

  5. TobyJDodd

    (Devotee)

    176contributions

Loading
Charging lower rent on investment property than area avg, will I be taxed at area avg? | ATO Community