The ATO has increased their data matching for rental property owners who are claiming tax deductions in their income tax returns.

In April, the ATO revealed it would use new data-matching technology to closely scrutinise residential and commercial property sales to ensure tax payers paid the correct amount of tax.  The ATO matches information with a number of state organisations.  Recently I was contacted by the ATO as they were matching information with the South Australian Lands Title Office to confirm ownership information.

 

Rental property owners should be aware of what tax deductions they are able to make on their rental properties. Expenses that can be claimed within an income year include:

  • Interest on a loan used to purchase a rental property.
  • Interest on a loan used to purchase land to build a rental property.
  • Repairs and Maintenance
  • Council Rates, Water Rates, Land Tax
  • Property Agent Fees

Investors are able to claim other expenses over a number of years including:

  • The cost of depreciating assets.
  • Structural improvements.
  • Assets that are part of a property such as stoves, refrigerators, air conditioning and hot water systems as a ‘decline in value’ deduction.
  • Improvements (or repairs) to the building after you purchase the property.

However, rental property owners should be aware of deductions they are not able to claim including acquisition and disposal costs of the property, expenses not actually incurred by them, such as water or electricity charges borne by tenants and expenses that are not related to the rental of a property.

Care should also be taken when refinancing a rental property loan, if you increase the loan ie to payout a personal car loan or to get access to some of the principal that you have already paid off then this may result in the loan being non deductible

Useful check for claiming your entitled deductions

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Rental Property Checklist

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Individual Tax Return Checklist

At the end of the financial year it can be a daunting tasks preparing your Individual Tax Return for lodgement. Use this checklist to assist with collecting all the information you'll need.

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Rental Property Calculator

At the end of the financial year it can be a daunting tasks preparing your Individual Tax Return for lodgement. Use this calculator to assist with collecting all the information you'll need.

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