3 common mistakes made by property investors at tax time

Thousands of property investors throughout Australia will be completing their tax returns with the start of the 2017-18 financial year. Here are three common mistakes to avoid, warns Paul Bennion.

paul benion

Traditionally, the ATO has focused on tax returns for investment properties and I believe that during the 2017-18 financial year, it will be no different.

In the past, the ATO has highlighted a number of common mistakes made by first time property investors when claiming rental deductions on their tax return.

Three common errors made by rental property owners which the ATO has highlighted are:

1. Claiming rental deductions for properties not genuinely available for rent.


2. Incorrectly claiming deductions for properties only available for rent part of the year such as a holiday home.

3. Incorrectly claiming structural improvement costs as repairs when they are capital works deductions, such as remodelling a bathroom or building a pergola, and overstating deduction claims for the interest on loans taken out to purchase, renovate or maintain a rental property.

Tax benefits related to tax depreciation for property investors are very generous but it is important that investors engage the services of a professional tax depreciation company, who is a member of the Australian Institute of Quantity Surveyors (AIQS).

AIQS is the professional standards body for quantity surveyors throughout Australia and enjoys a close working relationship with the ATO.

Over recent years, AIQS has worked with the ATO on the review and revision of the requirements for investment/rental property depreciation reporting.

Property investors should understand that tax depreciation is complicated like other areas of finance or tax and so it is essential that property investors get the right advice.

For depreciation professionals, having the appropriate training and qualifications and being a member of organisations such as the AIQS is critical in ensuring you can provide the best advice for your clients.

Without it, it is impossible to keep up-to-date with legislative requirements. Companies whose representatives are not members of AIQS are also not bound by any code of professional conduct.

Property investors should be wary of companies that are not members of AIQS and employ salesmen or women touting catchphrases and a more dubious approach to providing advice in relation to tax depreciation entitlements.

To help rental property owners make correct tax returns in relation to rental properties, the ATO has released a series of short videos that explain, in simple terms, the tax implications of buying, owning and selling a rental property, which can be accessed at its website.

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