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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