Rent Paid in Advance when Rental Property Sold

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28 Jan 2025

If a rental property is sold with rent paid in advance and the amounts paid in advance is then transferred to the purchaser at settlement, how do we specify this in tax return?

For example, rent paid by tenant for the FY is $5000, with $3000 of that paid in advance, then the property is sold and at settlement $3000 is adjusted (transferred) to the purchaser of the property.

For the seller, is the rental income reported as $2000?

or do we report income as $5000, but do a misc deduction of $3000 for the rent income transferred to the buyer?

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