ATO crackdown on investment property owners in 2015

One of the perks about owning a property as an investment is the numerous tax benefits available. Property investors can claim on a range of factors such as depreciation, borrowing and interest expenses as well as council rates and agent fees. However, investment property owners need to ensure they are doing everything by the book as this year the Australian Taxation Office (ATO) are increasing its scrutiny on those that own an investment property, in this case 1.8 million of us (8% of the population).

The ATO faces many challenges from investment property ownership, especially when it comes from investors over-claiming deductions. Even though interest rates are at an all-time low, this is spurring on property buying and aiding the property boom. It is up to the ATO to ensure that these investors are not taking advantage of the system.

Property investors own all types of property in Australia, whether it is a holiday home, a city apartment or a commercial property, but there are different things that each investor can claim depending on their situation.

In order for the ATO to check that investors are not rorting the system, they will be writing to property investors with properties in popular holiday spots to remind them to only claim the deductions that they are entitled to.

For rental property owners, this means that you can only claim for the periods the property is rented out and cannot be claimed for your own personal use. Holiday home owners in particular are more likely to make false claims according to the ATO who regularly find holiday homes being rented out, but the owners are using it, or their friends and family are staying rent-free.

Another claim that is often seen is the costs of renovation and repairs at the time of purchase. These claims cannot be claimed immediately and are in fact deductible over numerous years. The ATO will be paying particular attention to these types of claims and will push back any claims that do not add up.

According to the latest figures from the ATO, investment property owners claim on average $25,717 in deductions covering interest on loans, the write-off on capital works and much more. The ATO also reveals that in over two-thirds of cases, this amount is enough to produce a net loss; thereby allowing taxpayers to offset their loss against their income.

Just remember that you should only claim on deductions that you are entitled to claim. For those that own a holiday home, then you need to bear in mind that the ATO has access to various third party data, such as popular holiday listing sites, allowing them to determine whether your property was actually “available for rent”.
Published on 9th of June 2015 by Marty Stanowich
Marty Stanowich
Marty Stanowich


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