A company owns a residential rental property. The director wants to rent this property out to her daughter below market rates.
Hi @EBONYMAE,
When a company rents a residential property below market value to a director or their relative, both income tax and fringe benefits tax (FBT apply).
The company declares the actual rent received in its tax return. Because the rent is below market and the tenant is a related party, this will generally be a property fringe benefit, and the company will need to pay FBT on the discount.
Companies aren’t subject to the same specific deduction restrictions that apply to individuals renting below market rates. However, deductions are still only allowable where expenses are incurred to produce assessable income.
A company can be negatively geared, but only if the rental activity is genuinely carried on for income‑producing purposes.
Paying FBT doesn’t automatically allow a rental loss. Income tax deductibility and FBT are assessed separately, and renting below market rates to a related party may raise questions about whether the main purpose is income or providing a private benefit.
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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