Rental income you must declare

What you must declare

You must declare all the income you receive from renting, leasing or licensing your rental property (including from overseas properties) in your tax return. This includes:

• short-term rentals
• renting your property through a sharing platform
• renting part or all of your home
• formal and domestic arrangements where you rent out to family and friends whether for commercial (or market) rates or at less than those rates.

Types of rental income

Rental income can be payments you receive in cash or in the form of goods and services. You need to work out the monetary value of any payments you receive in the form of goods and services.

Rental income is payment for rent from your tenant. This is paid to either you, your agent or a property manager.

Payments relating to your rental income may include:

• bond money you retain in place of rent or keep because of damage to the property
• letting and booking fees you retain when renters or holiday makers cancel a booking
• insurance payouts, such as
  • damage from a natural disaster (such as a bushfire, flood or cyclone)
  • damage from an unexpected event (for example a burst sewage pipe)
  • for the loss of rent
• money you receive from a relief fund in a disaster
• payments for deductible expenses, such as
  • payments from a tenant to cover the cost of repairing property damage
  • government rebates for buying a depreciating asset (for example, a solar hot water system)
• lump sum payments of rental income
• any assessable amounts relating to limited recourse debt arrangements involving your rental property.

For more information, see:

• TR 2026/1 Income tax: rental property income and deductions for individuals who are not in business
• PCG 2026/2 Apportionment of rental property deductions – ATO compliance approach
• PCG 2026/3 Application of section 26-50 of the Income Tax Assessment Act 1997 to holiday homes that you also rent out – ATO compliance approach.

Domestic arrangements

Payments you receive from householders or family members that relate to the provision of family care or shared responsibility for household expenses are of a domestic nature. This means you:

• don't declare the amount you receive as income
• you can't claim deductions for any expenses.

However, amounts you receive in a shared household or family situation are assessable income to the extent they relate to providing a lease or licence for the use of your property. You need to work out if the:

• the amounts received are for shared household expenses or as a payment for the use of the property under a lease or licence
• arrangements are consistent with normal commercial practices in the area
• amount you receive is less than the commercial rent for the property.

If the arrangement for the use of the property under a lease or licence is consistent with the market rate rent for the property under normal commercial practices, we treat you the same as any other owner in a comparable arms-length situation.

If you are renting your property to family or friends and not charging rent at a market rate, it is likely your property has a mixed use of producing assessable income and a private or domestic use of providing accommodation for your family or friends. In these situations, your deductions should be apportioned to exclude the private or domestic use of the property. Where your expenses that would otherwise be deductible exceed the rent received, we will accept that it is fair and reasonable for you to limit those deductions to the amount of the rental income derived from the property, resulting in no net rental taxable income or loss.

For more information, see:

• TR 2026/1 Income tax: rental property income and deductions for individuals who are not in business
• PCG 2026/2 Apportionment of rental property deductions – ATO compliance approach
• PCG 2026/3 Application of section 26-50 of the Income Tax Assessment Act 1997 to holiday homes that you also rent out – ATO compliance approach.

Rental income and completing your tax return

You must declare rental income and related payments in your tax return in the year your tenant pays rent. If your tenant pays rent to your agent or property manager, declare rental income in the year your tenant pays them, not when it's transferred to you.

You need to declare rental income based on your legal ownership of the property. For example, if you own 50% of a property you must declare 50% of the rental income in your tax return.

Where to report

In your individual tax return, include amounts that you earn:

• in Australia at 'You had Australian interest, or other Australian income or losses from investments or property'
• from overseas property at 'Other foreign income'.

You can claim a foreign income tax offset for the tax you pay on rental income you earned in another country.

There are also special rules that apply to the deductibility of rental expenses that you can claim against your foreign rental income.