About rental income
If your partnership is carrying on a business and receiving rental income from that business, you must complete this item.
To determine whether you're carrying on a business, see Taxation ruling TR 97/11 Income tax: am I carrying on a business of primary production?
Show your share of the rental income or deductions at question 21 Rent in your Supplementary tax return for individuals 2025, if the only income you derive jointly (or in common) with another person was:
- rent from a property you jointly own
- interest from a jointly held account
- dividends from jointly held shares.
Income tests require each partner to report their share of the partnership's rental property income or loss. If the rental income is merely investment income and not partnership business income, report it in your supplementary tax return for individuals at question 21 for rental income or losses.
If your rental income is partnership business income, you must complete item 9, and show your:
- net rental property income or loss at item 53 – label H
- share of net rental property income or loss at item 54 – label K.
For more information, see item 53 Income test.
Former STS taxpayers still using the STS accounting method
If the partnership is eligible and has chosen to continue using the STS accounting method, base the gross rent at label F, interest deductions at label G, and general deductions and repairs at label H on the STS accounting method.
For more information, see Continued use of the STS accounting method.
Small business entities
Depreciating assets used in rental properties are generally excluded from the small business entity depreciation rules on the basis the assets are part of property that is subject to a depreciating asset lease.
For more information, see Assets and exclusions.
Gross rent
Show at label F the gross amount of rental income. This amount can't be a loss.
Rental income includes booking or letting fees, bond monies if the partnership becomes entitled to retain them, any insurance payouts that compensate for lost or forgone rent, and reimbursements from tenants of deductible expenses the partnership incurs.
If the partnership is registered, or required to be registered for GST, and GST is payable for rental income, exclude the GST amount from gross rent at label F.
Show rent from foreign sources at item 23 Other assessable foreign source income.
Lease premium received from a CGT event
Show a capital gain or a capital loss the partnership makes from the receipt of a lease premium on each partner’s own tax return.
For more information on CGT events involving leases, see Guide to capital gains tax 2025.
Interest deductions
Interest is generally deductible when paid for borrowed monies used to finance a property investment.
However, the thin capitalisation rules or debt deduction creation rules may apply to reduce interest deductions. These rules place a limit on the amount of interest and other borrowing costs that you can deduct for Australian tax purposes. For more information, see Appendix 3. The disallowed amount reduces the amount that the partnership would otherwise include at label G.
If the TOFA rules apply to the partnership, include all interest expenses it incurs on monies borrowed to finance a property from financial arrangements subject to the TOFA rules at label G.
Show at label G the total deductible amount of interest expense the partnership incurs in earning the rental income.
Capital works deductions
Show at label X the total capital works deductions amount for rental buildings and structural improvements, such as fences, retaining walls and sealed driveways. This will include any amount you report at label Y for Build to rent capital works deduction at 4%. See, Build to rent capital works deduction at 4%.
For information on capital works deductions, see Appendix 5. You can also work out your capital works deductions by using the Depreciation and capital allowances tool.
Other rental deductions
Show at label H the total of other deductible expenses the partnership incurs in earning rental income.
If the partnership is registered or required to be registered for GST, and GST is payable for rental income, exclude any input tax credit entitlements for expenses the partnership incurs from the amount at label H.
Expenses the partnership lists here that are costs associated with borrowing and servicing debt may not be allowable deductions under the thin capitalisation rules or debt deduction creation rules. For more information, see Appendix 3. The disallowed amount reduces the amount that would otherwise show at label H.
Deductions for the decline in value of depreciating assets the partnership uses to earn rental income are generally shown at label H. However, if the partnership allocates some of these assets to a low-value pool, you may need to show deductions at item 18 Other deductions.
For more information, see Appendix 6.
Net rent
Show at this item the net amount of any rent.
Calculate net rent by subtracting the deductions at labels G, X and H from label F Gross rent. Don't deduct the amount at Y when calculating Net rent. If this amount is a loss, print L in the box at the right of the amount.
For more information, see Rental properties guide 2025.
Build to rent capital works deduction at 4%
Show at label Y the total deductions claim for capital expenditure on eligible build to rent developments that are accessing the Build to rent development tax incentives.
- The development will be a large-scale Australian build to rent development that meets specified conditions on an ongoing basis to access this incentive.
- To claim this incentive, you must also have notified the Commissioner in the approved form of your choice for your eligible build to rent development to become an active build to rent development.
The depreciation at the 4% rate only applies prospectively from the date of your choice.
When working out the deduction amount, you may need to apportion your claim. For example, if the development is part of a mixed-use development or if the choice for the development took effect on a day other than the first day of the income year. The partnership must also include this amount in item 9 – label X. This is because the amount at label Y is informational only and you must not include it when calculating item 9 – label Net rent.
Continue to: Income excluding foreign income – items 10 to 15
Return to: Instructions to complete the Partnership tax return 2025