If you own an investment property, it’s more important than ever that you know what you can and can’t claim in your tax return.

About $45 billion in rental expenses were lodged to the ATO in the last financial year, which has prompted them to put property investor compliance as a priority on their radar.

The ATO’s data matching program has already caught out a high number of dishonest property owners.

 

Here are a number of things that you should be conscious of:

Short term rentals: There is no such thing as a rental hobby. All income from renting out all or part of a property must be declared as rental income.

Holiday homes: If you want to claim expenses, the home needs to genuinely be available for rent. Expenses associated with your personal use of the property cannot be claimed.

Loan calculations: You can only claim the portion of interest that is related to the rental property itself. If you refinance to purchase something unrelated to the property, the interest on this portion of the loan cannot be claimed.

Claiming immediate deductions: While you are entitled to claim the cost of repairs immediately, there are other home improvements that are considered ‘capital works’ and can only be claimed over a number of years.

 

If you need any assistance with understanding tax in relation to property, you can contact a property tax champion at Paris Financial.