One of the often quoted rules that gets discussion on SS is that of ownership %. The basic rule is that if title ownership is X % then all the rental income and costs must be shared based on ownership interest on title not by the contribution made by each owner.
This isn't always the case however. In some (rare / isolated) instances the % ownership on title may be disregarded. There are two ways
1. Ownership % on title is ignored and shared EQUALLY or
2. Ownership % on title is ignored and a different fixed % share is used if the partners have a written agreement.
The basic condition for either option is that the partners operate a rental property BUSINESS.
The ATO have some info here-
Factors to consider :
- the significant size and scale of the rental property activities
- the time spend on the activities
- extensive personal involvement in the activities, and
- the business-like manner in which the activities are planned, organised and carried on.
And the ATO suggest small business concessional may even be available.
In the example given a number of 26 is used and this is considered a business. But this is just one example. In the non-business example the number of IPs is two. So somewhere between 2 and 26 is a big gap....
This isn't always the case however. In some (rare / isolated) instances the % ownership on title may be disregarded. There are two ways
1. Ownership % on title is ignored and shared EQUALLY or
2. Ownership % on title is ignored and a different fixed % share is used if the partners have a written agreement.
The basic condition for either option is that the partners operate a rental property BUSINESS.
The ATO have some info here-
Factors to consider :
- the significant size and scale of the rental property activities
- the time spend on the activities
- extensive personal involvement in the activities, and
- the business-like manner in which the activities are planned, organised and carried on.
And the ATO suggest small business concessional may even be available.
In the example given a number of 26 is used and this is considered a business. But this is just one example. In the non-business example the number of IPs is two. So somewhere between 2 and 26 is a big gap....