The Tax Office has released a new toolkit for managing rental properties, after it identified areas that property investors commonly get wrong.
In a review of tax returns by the ATO, prompted by a multibillion-dollar budgetary hole created by individuals not paying the right amount of tax, key problem areas were identified for property investors.
Although the mistakes aren’t necessarily made with sinister intent, they can still attract penalties for property investors, or a surprise tax bill.
Common areas taxpayers get wrong with their rental properties include:
- Claims related to interest on a loan which was taken out to purchase a property.
- Borrowing expenses incurred when taking out a rental property loan.
- Over-claiming or incorrectly claiming repairs, maintenance and capital expenditure.
- Renting out a room, unit or a whole house on an occasional basis through the sharing economy without correctly declaring income.
After it’s fieldwork, the ATO believes that many Australians aren’t confident they have the knowledge or information to accurately prepare and lodge their tax returns.
You can access its new toolkit here.