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RB_(Newbie)Newbie
17 July 2024

I am the only person on the property title, however through a co-ownership agreement my brother owns 20% of the property. As a result, he receives 20% of rental income and pays 20% of expenses etc. I know typically it is the ownership on the property title that determines who can claim deductions etc. but does that mean I am meant to declare 100% of the rental income on my tax return (even though I only actually receive 80%) and his 20% of rental income is tax-free?

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578 views
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ZebN(Champion)Champion
17 July 2024

It appears all of the income and deductions must be lodged on your personal tax return. There is an ATO Ruling that says:


5. Because co-owners of  rental   property  are generally not partners at general law, a partnership agreement, either oral or in writing, has no effect on the sharing of income/loss from the property.


6. Accordingly, the income/loss from the  rental   property  must be shared according to the legal interest of the owners except in those very limited circumstances where there is sufficient evidence to establish that the equitable interest is different from the legal title.


https://www.ato.gov.au/law/view/document?src=rs&pit=99991231235958&arc=false&start=1&pageSize=10&total=39&num=1&docid=TXR%2FTR9332%2FNAT%2FATO%2F00001&dc=false&stype=find&df=1346&tm=phrase-basic-rental%20properties#P38


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Most helpful reply

ZebN(Champion)Champion
17 July 2024

It appears all of the income and deductions must be lodged on your personal tax return. There is an ATO Ruling that says:


5. Because co-owners of  rental   property  are generally not partners at general law, a partnership agreement, either oral or in writing, has no effect on the sharing of income/loss from the property.


6. Accordingly, the income/loss from the  rental   property  must be shared according to the legal interest of the owners except in those very limited circumstances where there is sufficient evidence to establish that the equitable interest is different from the legal title.


https://www.ato.gov.au/law/view/document?src=rs&pit=99991231235958&arc=false&start=1&pageSize=10&total=39&num=1&docid=TXR%2FTR9332%2FNAT%2FATO%2F00001&dc=false&stype=find&df=1346&tm=phrase-basic-rental%20properties#P38


Liked by RB_
Taxduck(Taxicorn)Taxicorn
17 July 2024

There is an interesting ATO ruling on beneficial ownership. Beneficial ownership refers to someone who has the benefits of ownership but their name is not on the title. While this ruling is not similar to your situation and it is in regard to CGT it is worth reading in case there are similarities with your agreement with your brother.

As your name is the only one on the title then currently you claim 100% of the income and 100% of the expenses. If beneficial ownership is something worth pursuing then you would need a private ruling.

https://www.ato.gov.au/law/view/view.htm?docid=EV/1051633585335&PiT=99991231235958

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RB_(Newbie)Newbie
30 July 2024

from my readings in TD 2017/11, beneficial ownership also appears to apply to income tax:


2. For income tax purposes, interest income on a bank account is assessable to the person or persons who beneficially own the money in the account


Although this only mentions interest income on bank accounts, can I assume this would apply to all aspects of income tax?? i.e. rental income included.



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How much of the income/deductions do I include on my co-owned property? | ATO Community