Hi😊
Good day
My situation is.
I have a rental property that is positively geared but not rented out at market value. Is there any ATO rule or guidance that explains how this situation should be treated — particularly regarding allowable deductions and income reporting?
Thank you in advance
Don't quite understand your question.
"Rental and other rental-related income is the full amount of rent and associated payments that you receive, or become entitled to, when you rent out your property"
Rental income | Australian Taxation Office
Claim deductions as per normal
Rental expenses | Australian Taxation Office
If not rented at normal commercial rates then from the rental properties guide (page 24)
"If you let a property, or part of a property, at less than normal commercial rates, there may be a limit on the deductions you can claim. For example, your deductions may be limited to the amount of rent you receive for any period you rent your property for less than normal commercial rates. "
Download the guide through this link
How to get the Rental properties guide 2025 | Australian Taxation Office
So you can't negatively gear a property rented out at less than commercial rates.
Good day 😊
Thank you for your response.
I meant that the rental property income is greater than the expenses, which results in a positively geared property. However, the rent is not charged at commercial or market value. I haven’t been able to find an exact ATO rule or guidance that specifically addresses this situation.
Just to share, we have found a reference related to negatively geared properties that are not rented at commercial or market value, which is why we are looking for a similar ruling for positive gearing.
Reference:
Negative geared and not at commercial/market value rate
1011728898205 | Legal database
“In your case, you and your spouse own a rental property that you are currently leasing to your daughter and her husband. You charge your daughter and husband a rent that is less than the market value rate, and as such, this is a non-arm’s length arrangement. As a result, it is questionable whether the amounts you receive are assessable and, therefore, whether the deductions are allowable. However, if the amounts were to be assessable, the deductions you can claim are restricted to the amount of income you receive from the property. In other words, the deductions can only be applied to reduce the rental income to nil, and any excess deductions cannot be used to offset other income.”
Consequently, you are unable to claim the full deduction for your expenses from the rental property, as it is restricted to the income you receive.
Thank you
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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