Property Investors Warned about ATO Crackdown

A Tax Depreciation blog by Paul Bennion.

The private owners of rental properties throughout Australia need to ensure that their tax affairs are in order because the Australian Taxation Office (ATO) will be paying particular attention to tax returns by owners of rental properties for the last financial year.

A number of common errors made by rental property owners when completing their tax returns include:

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

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

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

To assist property investors complete their tax returns correctly, the ATO has produced a free information booklet entitled ‘RENTAL PROPERTIES 2015.’

This comprehensive 41 page booklet covers all taxation matters relating to owning an investment property and can be downloaded for free at:

Building a successful property portfolio is a key objective of most mum and dad property investors when they purchase their first investment property and it is very important that taxation issues are properly addressed right from the start.

The tax benefits associated with tax depreciation can be very signification with DEPPRO clients achieving tax benefits obtained through depreciation equivalent to 60% of the total purchase price of the property. In some cases these tax benefits can total $300,000 based on a purchase price of $500,000

Many investors in Australia totally underestimate the number of items that can be depreciated for tax purposes and this comprehensive list can even include garden gnomes, cubby houses and if they own an apartment, then common areas such as car parking and recreational facilities.

To qualify for these legitimate tax deductions, an investor must have a fully compliant tax depreciation company undertake an onsite inspection of the property and then compile a depreciation report based on this inspection.

Estimates of tax depreciation benefits for an investment property made from an office desk will not be accepted by the ATO.