ATO focus on rental property deductions
The ATO has announced that it is increasing its focus on rental property deductions and is encouraging all rental owners to double-check their claims before lodging their tax return.
The ATO is paying particular attention to excessive rental property deductions claimed, especially those located in popular holiday destinations around Australia. It has reminded taxpayers to only claim the deductions they are entitled to, for the periods the holiday home is rented out or is genuinely available for rent.
Few simple rules rental property owners should follow to avoid making mistakes on their tax return highlighted by the ATO include:
• keeping accurate records. This ensures declaring the right amount of rental income and keeping evidence for the claims made, and
• only claiming deductions for the periods the property is rented out or is genuinely available for rent. If a property is rented at below market rates, eg to family or friends, deduction claims must be limited to the income earned while rented.
Source: ATO media release, 30 August 2015.