Avoid Incorrect Property Deductions

Brent Wise

Brent Wise

It is essential to point out that to avoid incorrect property deductions about the property that you own for investment purposes, mainly related to holiday homes.

For holiday investment properties, the property tax deduction can only claim during period rented out or available for rent.

You need to keep an accurate record of expenses and evidence that the property is being rented out at market rates.

Generally, deductions that you can claim include:

  • Advertising for tenants
  • Body corporate fees
  • Council rates
  • Water charges
  • Land tax
  • Cleaning
  • Gardening
  • Lawn mowing
  • Pest control
  • Insurance ( building contents and public liability)
  • Interest charged on loan to purchase
  • Interest on a loan to buy a depreciating asset ( air conditioner)
  • Interest on a loan to make repairs to rental property (roof repairs)
  • Interest on a loan to finance renovations on the rental property
  • Interest on a loan to purchase land on which to build a rental property,
    property agent’s fees and commissions
  • Repairs and maintenance such as replacing a fence and repairing electrical appliances or machinery
    interest in painting a rental property and maintaining plumbing

The deductions that you cannot claim include expenses paid by your tenants such as water or electricity charges. Acquisition and disposals costs on title transfer these are included in the cost base.

It is essential to ensure that all rental income is included for the period that you are claiming deductions.

The consequences of incorrectly deducting property expenses can result in severe penalties, and thus the onus is on the property owner to ensure for his or her peace of mind that only actual property expenses have been deducted. The ATO has made technological advancements, and the extensive use of data is allowing them to identify incorrect or suspicious claims.

Source: ATO website – https://www.ato.gov.au