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Home_questions(Newbie)Newbie
6 May 2024

I'm about to buy a property with someone as Tenants in Common. I will be living there, and the other owner will be an investor. I will pay rent to the other owner and they will claim that as rental income for tax purposes. Considering we will be 50/50 split owners, do I need to pay them full commercial rate rent, or 50% of the commercial rate, considering I will also be paying 50% of the mortgage? It will be a private arrangement - not going through REA's etc.

1,530 views
3 replies
1,530 views
3 replies

Most helpful response

Most helpful reply

BrookeATO(Community Support)Community Support
12 Dec 2024

Hi @Graya


It's up to you, if you're part owner of the property it'd be beneficial to have an agreement in place stating who is responsible for what.


We'd suggest reaching out to a Registered Tax Agent who's experienced in property for further advice. We aren't in a position to advise you on what agreement you should have in place.

All replies

CaroATO(Community Support)Community Support
13 May 2024

Hi @Home_questions,


If you had a formal arrangement, 50%.


It's an interesting scenario because you won't have a formal arrangement. Who's to say you're not renting 50% of your share. Although the other person will be declaring all the rent you pay as income, it's still a good idea to have a formal paper trail. This would help for claiming deductions as an investor as well, just in case we ask questions.


Keep in mind, you can't rent your own property to yourself.

graya(I'm new)I'm new
26 Nov 2024

Thank you for the above - most helpful.

Can you elaborate on a 'formal agreement'? Does this need to be completed by a property lawyer?

OR

Is an 'Agreement for sale and purchase of land' doc that indicates ...'The portion of the land (50%) in Certificate(s) of Title Volume...' considered a formal document? And if so adequate as part of a formal paper trail?


Do you advise a 'separate certificate of title for each share' as best practice in Tenants in Common? Please advise...

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