Rental Property Claims in Trouble

ATO Commissioner Chris Jordan has signalled his agency’s intent to crackdown on rental property deductions after seeing dividends in their enforcement of work-related expenses.

ATO Commissioner Chris Jordan said the Tax Office’s audits of over 300 rental property claims found errors in almost nine out of 10 returns reviewed.

This announcement follows on from the removal of travel deduction claims for the cost of travel clients incur relating to inspection, maintaining, or collection of rent for a residential rental property last year.

“We’re seeing incorrect interest claims for the entire investment loan where it has been refinanced for private purposes, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent,” said Mr Jordan.

Clients are often unaware that any kind of withdrawal or refinance of an investment loan for private purposes, can result in a decrease to the allowable interest amount to be claimed.

It is safe to say that after the ATO’s successful focus on work related deductions over the last few years. This year clients with rental properties are likely to be under scrutiny.