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KangasUnited12(I'm new)I'm new
11 May 2026

Hi, my wife and I are considering purchasing an investment property on a co-ownership (50/50) basis which I would then rent out to her for her to run her business on an arms-length and commercial basis. Am I correct in saying that, for the purposes of negative gearing, I would have to recognise half of the rental as income and offsetting that with half of the expenses incurred on the home? For my wife, the full rent that she's paid will be considered a deductible expense for her business but half that she's entitled to as co-owner will be considered as taxable income? Am I missing anything else or are there any other considerations? Thanks

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30 views
2 replies

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Most helpful replyATO Certified Response

RachelATO(Community Moderator)Community Moderator
ATO Certified Response12 May 2026

Hi @KangasUnited12,


As co‑owners with a 50/50 legal interest, you’ll each include 50% of the rental income and claim 50% of the rental property expenses in your individual tax returns.


For your wife’s business structure, the treatment differs slightly. If she’s a sole trader, she can claim the full rent paid as a business expense in her individual tax return, while also reporting her 50% share of rental income as a co‑owner. If she operates through a company, the company claims the full rent as a business expense, but your wife still reports her 50% share of rental income personally as the property co‑owner.


The rental arrangement must be genuinely at arm’s length and at commercial market rates, with income and expenses attributed according to legal ownership.


You should also consider whether GST applies. This will depend on whether the property is leased as residential premises or under a commercial lease for business use.

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Most helpful replyATO Certified Response

RachelATO(Community Moderator)Community Moderator
ATO Certified Response12 May 2026

Hi @KangasUnited12,


As co‑owners with a 50/50 legal interest, you’ll each include 50% of the rental income and claim 50% of the rental property expenses in your individual tax returns.


For your wife’s business structure, the treatment differs slightly. If she’s a sole trader, she can claim the full rent paid as a business expense in her individual tax return, while also reporting her 50% share of rental income as a co‑owner. If she operates through a company, the company claims the full rent as a business expense, but your wife still reports her 50% share of rental income personally as the property co‑owner.


The rental arrangement must be genuinely at arm’s length and at commercial market rates, with income and expenses attributed according to legal ownership.


You should also consider whether GST applies. This will depend on whether the property is leased as residential premises or under a commercial lease for business use.

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How to treat income from renting to co-owner of investment property? | ATO Community