I have a property that my parents live in. They pay rent but it is 55% of market value. What are the tax implications for this? Am I able to claim deductions to the total value of the yearly rent? Any information would be very helpful. Thank you.
Hi @LukeSD
That sounds like a pretty nice arrangement with your parents.
Regardless of them paying 55%, you're still able to claim deductions on the expenses you've incurred on the property. Because you're renting below market value, you'll need to work out the amount that relates to producing income. We've got some info about rental expenses you can claim on our website that you should check out.
When/if you want to sell the property, you might have to pay capital gains tax (CGT). We've got a guide to CGT and property that we'd suggest having a read of.
Hi @LukeSD
That sounds like a pretty nice arrangement with your parents.
Regardless of them paying 55%, you're still able to claim deductions on the expenses you've incurred on the property. Because you're renting below market value, you'll need to work out the amount that relates to producing income. We've got some info about rental expenses you can claim on our website that you should check out.
When/if you want to sell the property, you might have to pay capital gains tax (CGT). We've got a guide to CGT and property that we'd suggest having a read of.
Am I able to claim deductions to the total value of the yearly rent?
Yes, but no more.
Assuming total expenses exceed rent.
Could they not claim 55% of everything? Loan interest, insurance, rates etc.? Why is it only up to the amount of rent you receive? That means it can only be neutrally (or positively) geared no matter if you're charging 55% or 80% market value which makes no sense.
For example, say the loan interest (ignore all other expenses for now) is $1000, market value rent is $500 and you're charging $400 (80%) to a family member, I would have thought it would make sense that you can claim 80% of the $1000 interest ($800), not just the actual rent received ($400).
So if they were paying market value of $500 rent you can claim $1000 interest, but if they're paying $400 instead you can only claim $400?
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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