Author: AaronSmith(Initiate)Initiate 4 June 2024
I have 100% ownership of a residential rental property as per the title.
If I were to sign a lease with the trustee (whether an individual or a corporate) of my own family trust at the highest of all the rent appraisals done by a number of real estate agents, would I have satisfied section 13 of ITR-2167 i.e. following normal commercial practice by seeking appraisals from licensed real estate agents and rented the property at the highest appraised rent as any landlord would?
Letting of property to relatives
13. Where property is let to relatives the essential question for decision is whether the arrangements are consistent with normal commercial practices in this area. If they are, the owner of the property would be treated no differently for income tax purpose from any other owner in a comparable arms length situation.
If the trustee of the family trust down the track managed to find a tenant who was willing to sub lease the entire property from the trust at a rent higher than what the trustee have rented it from me, would the rent difference i.e. the rent that the trustee was receiving from the sub-tenant minus deduction of the rent that the trustee was paying to me become the assessable income of the trust?
Author: AriATO(Community Support)Community Support 17 July 2024
Hi @AaronSmith
This is a tricky one to work out and best to get tailored advice from us via the link TonyATO gave.
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