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gwalker261(Newbie)Newbie
15 Jan 2025

Hi - I understand the rules around deductibility for expenses associated with rental property being leased to a family member. What I haven't been able to find is a clear definition of what "commercial" rent is. Specifically, if I am renting to a family member I am not exposed to costs such as management fees, letting fees, inspections, advertising etc. In this situation I would have the view that "commercial" rent is around 15-20% lower than another arms length arrangement where these costs are being incurred. Would the ATO view this position as reasonable? Thanks

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Bruce4Tax(Taxicorn)Taxicorn
15 Jan 2025

Same rent as you would charge someone who was not a family member.


Not everyone rents via a real estate agent, so agent charges are not relevant.


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Most helpful reply

Bruce4Tax(Taxicorn)Taxicorn
15 Jan 2025

Same rent as you would charge someone who was not a family member.


Not everyone rents via a real estate agent, so agent charges are not relevant.


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gwalker261(Newbie)Newbie
16 Jan 2025

Hi Bruce4Tax - and thanks for the quick response. The only qualification I would put on your response is that the "market rent" available through an agent is typically more expensive than the "market rent" available through a private arrangement. This is in the same way that the market value for a car bought through a dealer is substantially higher than a car purchased privately (or a house purchased privately or goods bought on gumtree versus cash convertors etc etc). It all comes down to the nuance of what is market value when different markets may be in play. Cheers.

Bruce4Tax(Taxicorn)Taxicorn
16 Jan 2025



Market rent = amount shown on a rental appraisal based on rental of comparable properties, and prepared by someone qualified to do so.




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What is considered "commerical" rent when renting to a family member? | ATO Community