Income received by way of rent from residential, commercial or industrial property is assessable income, with expenses incurred in gaining such income able to be claimed as deductions
• Date of signing contract to purchase property.
• Date property first became income producing.
• Number of weeks it was rented.
• If property purchased as joint tenants – income and deductions must be divided equally.
• If the property is purchased as tenants in common – the percentage of the income and deductions may vary according to their interest in the property as specified in the property title.
These details must also be kept with the taxpayers records.
Capital gains implications – In general, on disposal of the property, it will subject to capital gains tax for the period that it was rented out. There are however, a few exceptions to this rule.
Rental income is assessable when received.
It includes- advance rent, late rent and current rent received in the income year and insurance payments for loss of rent.
It excludes- rent due but not paid, rental bond (unless used for back rent or for expenses).
In the case of properties in the hands of real estate agents, they are acting as the owner’s agent and they receive income on the owner’s behalf. Income is declared from the agent’s statements from the July to June even through the rental periods may be in different financial years and the income may not be credited to the owner’s account until July of the following year.