When it comes to rental properties, it's important to declare all income you receive, including from overseas properties, in your tax return. This includes income from:
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Short-term rentals
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Renting your property through a sharing platform
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Renting part or all of your home
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Arrangements with family and friends where rent is less than commercial or market rates
Types of Rental Income
Rental income can be received as cash payments or in the form of goods and services. It's essential to calculate the monetary value of any goods and services received as payment.
Rental income typically refers to rent payments from your tenant, whether paid directly to you, your agent, or a property manager. Additional payments related to rental income may include:
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Bond money retained in lieu of rent or for property damage
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Letting and booking fees retained when renters or holidaymakers cancel
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Insurance payouts for:
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Damage from natural disasters (e.g., bushfire, flood, cyclone)
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Damage from unexpected events (e.g., burst sewage pipe)
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Loss of rent
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Disaster relief funds received
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Payments for deductible expenses, such as:
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Tenant payments for repairing property damage
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Government rebates for purchasing a depreciating asset (e.g., solar hot water system)
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Lump sum payments of rental income
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Assessable amounts related to limited recourse debt arrangements involving your rental property
Domestic Arrangements
If you receive payment from family members in the form of "board and lodging," this is considered a domestic arrangement, meaning:
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You do not declare the rent as income
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You cannot claim expenses
If you rent to relatives or friends, you need to determine whether:
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The arrangements are consistent with normal commercial practices in the area
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The price is less than commercial rent
If the arrangement aligns with normal commercial practices, it is treated the same as any other arms-length rental situation. However, if rented below commercial rent, expense claims may only be allowed up to the amount of rent received.
Rental Income and Completing Your Tax Return
You must declare rental income and related payments in your tax return for the year the tenant pays rent. If rent is paid to your agent or property manager, declare it in the year your tenant pays them, not when it is transferred to you.
Declare rental income based on your legal ownership of the property. For instance, if you own 50% of a property, you must declare 50% of the rental income on your tax return.
