Apportionment
Dividing a shared cost so only the income-earning share is claimed.
Apportionment is dividing a cost between the part of something that earns income and the part that does not, so only the income-earning share is claimed. A home that is 30% rented out claims 30% of shared costs such as rates and insurance, while a cost for the rented part alone is claimed in full.
Floor area is the usual measure for a building, and time is added when a part was only rented for some of the year. The same idea runs through a car used partly for work or a phone used partly for business, which is why a business-use percentage is really an apportionment rule under another name. Income is not apportioned the same way: rent from a tenant is rental income in full.
Worked example
A house is 30% let to a tenant, 30% a studio you work from and 40% your home. Council rates of $2,400 split into $720 rented, $720 business and $960 private. A new lock on the tenant’s door for $150 is not split at all — it is a rented-part cost, claimed in full.
Common mistake
Applying the share to everything, including costs for one part. A repair inside the tenant’s room is 100% a rental cost; cutting it to 30% because the house is 30% rented under-claims it, just as claiming 30% of a new bedroom carpet for yourself over-claims.
Grounded in ATO — Renting out part of a home guidance. Figures last checked . General information, not tax advice.
Related terms
Negative gearing
A rental whose deductible costs are more than its rent.
Rental schedule (rental property schedule)
Where each rental’s income and expenses are reported.
Initial repairs
Fixing problems that came with a rental when you bought it.
Depreciation (decline in value)
Claiming the cost of a big asset gradually over its life.
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Questions about this term
Apportionment: common questions
- How is the percentage for a partly rented home usually worked out?
- By floor area in most cases: the area only the tenant uses, plus a fair share of areas you both use, as a fraction of the whole home. If the room was only rented for part of the year, the time it was rented is applied as well. Keep a note of how you measured it, because the same share is used every year until the use changes.
- Does apportionment apply to the rent a tenant pays me?
- No. Apportionment divides costs, not income. Rent from a tenant is rental income in full, however small their room is, and it is the shared costs of the home that are divided by the income-earning share. If you co-own the home, your ownership share applies to the rent and the costs alike.
- Can one cost be divided between rental, business and private use at once?
- Yes. A home that is part rented, part a place of business and part private divides a shared cost three ways, by each part’s share. Each part then goes where it belongs: the rental part to the rental schedule, the business part to the business, and the private part nowhere, because it was never a deduction.
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