“People claim expenses for periods when they actually use the house for themselves, or their friends or family use it. That’s not okay. So it’s really about making sure you only claim the parts. associated with any rental “.
Kasapidis said that if investors received some kind of relief in the form of subsidies or support from the state government, this is also subject to taxes and should be declared as income as a rule.
There are more than 2.2 million Australians who have investments in rental properties and claim more than $ 50 billion in deductions each year, according to 2018-19 tax statistics. Credit:
Property Tax Specialists founder and chief adviser Shukri Barbara said investors should also be wary of claiming when they rent their property to friends or family with below-market rents.
“Some people rent relatives for less than the market value and want to claim interest. This is not acceptable if you ask for less than the rental market, you can only claim up to the amount of rental income you receive, ”Barbara said.
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He said investors should also make sure not to mix claims between repairs, which are deductible, and improvements, which claim depreciation over time.
“For example, if you fix a stick on a fence, it’s a repair. But if you’re replacing the whole fence, then you’ll claim depreciation of the improvement.
“A repair is something you can fix and you can get a full deduction for the service you paid for. But if it’s a replacement for important items, such as roofs, it will be part of the improvement. Once you use materials new in a great job, that’s improvement ”.
Barbara warned investors to be meticulous with their record keeping, as the ATO is based on its audit capabilities.
“Every year they advance a little with the technical capacity to look for things. If the ATO calls you and asks you a question, they already have the answer. Make sure your documentation and records match what you claim. The tax office already has all the answers. “
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Barbara also said the ATO checks short-term rental platforms to confirm if they are actually rented at reasonable prices, rather than inflated prices that leave the property vacant.
Australian Real Estate Institute President Hayden Groves said investors should be fine if their properties are managed by agents.
“Our members are real estate agents and run precise systems within their own agency to account for every dollar and penny that comes in,” Groves said.
Groves said the ATO was paying special attention to holiday rental income, warning investors to be vigilant and not to exaggerate deductions.