Tax office warns investors. During 2019 the Australian Taxation Office (ATO) identified a large number of deductions claimed by property investors including errors.
This has the ATO increasing their auditing of property investors. During the 2017-18 financial year about 1,500 were audited, while this increased to 4,500 in the 2018-19 financial year.
Tax office warns investors
Here are the most common errors noted by the ATO:
- Interest payments – Investors are using some of their investment loan to meet non-property costs and later claiming a 100% tax deduction on interest payments.
- Capital works – When incurring capital works on an investment property such as home improvements investors have been cited deducting 100% of their home renovations expenses upfront, when this is to be claimed over a number of years.
- Holiday home – Investors have been claiming expenses on their holiday home when its not being leased out as an investment property.
If you’re an investor, you should be careful on how you administrate your property expenses. Using an accountant is one way to prevent errors from occurring. They are always up to date with tax law and can help maximise your entitlement correctly. If you want to learn some tax tips for property investors click the link.
The ATO has the legal right to check your records with other third parties including banks and insurers. It is essential you declare all your income and claim deductions accurately and correctly.
If you’d like to learn more about buying an investment property, please don’t hesitate to contact us. We would welcome the opportunity to help with your property purchase. Our YouTube channel and Market Insights also provide a wealth of information to assist you with many areas relating to property investments.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
May 2020
