The ATO says every amount an owner receives from renting, leasing or licensing a rental property goes in their tax return, including income from a property overseas. It belongs to the year the tenant pays, even when the tenant pays an agent who passes the money on later, and each owner declares the share that matches their legal ownership.
General informationThis is the ATO’s description of rental income in plain words, not tax advice about any property or return. The ATO’s Rental properties 2026 guide on rental income is the place to check, and a registered tax agent can advise on a particular return.
More than the weekly rent
Rent is the payment from the tenant, whether it reaches the owner, their agent or a property manager. Around it sit other payments the ATO also treats as rental income, and one it does not.
| The payment | Rental income? |
|---|---|
| Rent from a booking on a sharing platform, or for a room or the whole of the owner’s home | Yes. |
| Rent from family or friends | Yes, under a formal or a domestic arrangement, at the market rate or below it. |
| Payment in goods or services instead of money | Yes, at its value in money, which the owner has to work out. |
| Bond the owner is entitled to keep | Yes, for example when a tenant defaults on the rent or damage needs repairs or maintenance. |
| Letting or booking fees kept after a cancellation | Yes. |
| An insurance payout | It can be, for example a payment that makes up for lost rent. |
| Rent paid as a lump sum | Yes. |
| Money from family in the household toward its shared costs or care | No. It is domestic: it is not declared, and no expenses are claimed against it. |
The line between the last row and the others can move. Money from a shared household is assessable to the extent it pays for a lease or licence to use the property, and if that arrangement is at the market rent on normal commercial terms, the ATO treats the owner like any other owner dealing at arm’s length. Renting to family below the market rate brings its own limit on deductions, set out in the guide to rental losses and negative gearing.
The year the rent belongs to
The test is when the tenant pays, not when the money lands in the owner’s account. Where a tenant pays an agent or property manager, the income belongs to the year the tenant paid them. The amount is the whole of the owner’s share of the rent earned, whoever it was paid to. The ATO’s own example has owners reporting the gross rent, before management fees and the expenses the manager paid for them are taken out.
Illustrative example, not a real caseA tenant pays the final week’s rent to the agent on 29 June 2026. The agent deducts a fee and pays the balance to the owner on 7 July. Under the ATO’s rule the rent belongs to the year in which the tenant paid the agent, and the figure declared is the rent before the fee came off. Any deduction for the fee is a separate question.
Whose income it is, when there are two owners or more
Co-owners who are not running a business of letting rental properties divide the income and the expenses according to their legal interest in the property. That holds even where the owners have agreed something different, in writing or by word of mouth. The ATO points owners who are unsure how they hold the property to its title deed.
| Held as | The division |
|---|---|
| Joint tenants | Each owner holds an equal interest, so the split is equal. |
| Tenants in common | The interests can be unequal, such as 20% and 80%, and income and expenses follow them. |
| Partners carrying on a business of letting rental properties | Net rental income or loss is divided by the partnership agreement, and equally if there is none. |
Some costs belong to one owner alone. A co-owner who borrows to buy their own interest can claim all of the interest on that loan, without dividing it among the other owners, and borrowing expenses on their own loan are theirs too. Most people who co-own one or several rental properties are investors rather than partners in a business, the ATO says, because of how little rental activity they do and how lightly each co-owner takes part.
Tax that can fall due during the year
Pay as you go (PAYG) instalments are payments toward the tax expected for an income year. As at the ATO’s Rental properties 2026 guide, an owner generally needs to pay them with $4,000 or more of business or investment income, such as rent, and a debt on their income tax assessment of more than $1,000.
Two other points sit beside the income. Because the sale of existing residential premises is generally input taxed, GST doesn’t apply to the rent received from them. And where rent from a property in another country has been taxed there, a foreign income tax offset can be claimed for that tax.
What shows the income
The ATO’s examples of records of the amounts received are:
- a statement from the property or managing agent
- a rent book, or bank statements showing the rent going into the account
- documents recording any bond kept in place of rent.
These records sit with the owner and are not sent in with the return; the ATO may ask to see them.