ATO to target Property Investors

Landlords need to avoid a number of traps when declaring costs for their investment properties.

The following article from The Residential Property Manager advises that H& R Block, Australia’s largest network of tax accountants, expect the Australian Taxation Office (ATO) to target property investors in 2014. Landlords need to be aware that any changes in the structure of their ownership or rental agreements may reflect on what they can and cannot claim.

Regional director Frank Brass has outlined key traps property investors face when declaring an investment property.

“There are a range of traps that property investors need to avoid, with the main one being that if their property has not been available for rent in the 2014 financial year, no deductions can be claimed," he said.

“We are also finding that property owners are still trying to claim deductions on their weekend getaway places when they are not being rented or leased. Meanwhile, rental income and deductions from part-owned weekenders can only be claimed in the proportion of the ownership level.” 

According to H&R Block, another common error occurs when a loan is taken out to purchase a new property that the investor moves into and the old residence is rented. In this case H&R Block says the interest is not deductible as the loan was used to purchase your principal residence and not the investment property.

The tax accountants also warned of errors when a drawdown is taken on an investment property loan to purchase a car. The interest on the loan needs to be apportioned for the per cent of the loan for the investment property and a per cent for the car, H&R Block said.

Other key traps highlighted include split loans, travel expenses, legal expenses and deductions following a decline in value.  Written by Staff Reporter, RPM online, Monday 25 August 2014.

.....At Doyle Spillane we have found that issues with claims from an investment property tend to arise when circumstances have changed during a financial year and the accounts have taken some time to reflect those changes.