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Beware the ‘50:50 rule’!

By Sarah Bradford, June 2020

Sarah Bradford examines the default 50:50 rule when taxing income from the jointly-owned property of spouses or civil partners and explains how to avoid falling foul of the rule. 

Many married couples and civil partners invest jointly in property, which they rent out to generate an income. From a tax perspective, it makes sense for that rental income to be taxed on the partner with the lowest marginal rate of tax.  

However, this is not how the rules work, and without careful planning and organisation it is easy for the tax bill to end up higher than it needs to be. 

50:50 rule 

The relevant tax legislation (ITA 2007, s 836) provides that if income arises from property held in the names of individuals: 

  • who are married to, or civil partners of, each other; and 
  • who live together, 

they are treated for

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