Just a hypothetical question.
A residential rental property.
I am the main tenant who is renting the property from my landlord for $890 per fortnight which is at market value.
Then I rent out 50% of the property to a friend (assumes that we share every part of the property, so it is 50%) on an Arm's Length Basis, and the rent I received is $400 per fortnight which is also around market value range.
After considering the private usage of 50%, my rental income is $400 pf, expense is $445 pf. So I will be making a loss of $45 pf, which is $1,170 of rental loss yearly.
The Tax Office has allowed taxpayer to use a negative-gearing strategy which is using rental loss to mitigate the other income.
So my question is, under this subletting circumstance, am I still be able to use the subletting rental loss to offset my other income?
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