ATO: Avoid incorrect rental property claims

By |

In the lead up to the June long weekend, the Australian Taxation Office (ATO) is reminding taxpayers that it’s paying close attention to rental properties located in popular holiday destinations around the country.

Assistant Commissioner Kath Anderson said that last year, the ATO was able to identify a large number of mistakes with deductions for rental properties, particularly with regards to holiday homes.

“We’ve noticed some people are claiming deductions for holiday homes even where the property is not genuinely being rented out, or genuinely available for rent,” Anderson said. “There’s no problem with people using their rental property for their holiday, but holiday home owners need to remember they can only claim tax deductions for expenses made during a period when the home is rented out or genuinely available for rent.”

Property owners also need to understand that if they wish to rent out their properties at a discounted rate (also known as “mates’ rates”), then they can only claim deductions equal to the amount of rent charged.

“One taxpayer had to pay the ATO back over $45,000 in tax from deduction claims made for a holiday home they were renting out to friends and family below the market rate,” Anderson said.

The ATO is focused on using data to identify errors. “Property owners should be aware that incorrect rental property claims will not go unnoticed. Technology enhancements and extensive use of data is allowing us to identify incorrect or suspicious claims. We also have a good idea of the locations likely to be used for holiday homes,” she said.

Anderson reminded owners of rental properties, particularly those who rent out holiday homes, to always double-check their claims before lodging their tax returns. They should also follow a couple of simple rules.

“Firstly, make sure that you declare all rental income and only claim deductions for periods that the property is rented or was genuinely available for rent,” she said.

“Secondly, make sure you have accurate records of expenses, and strong evidence of the property being rented or genuinely available for rent at market rates. Advertising through a real-estate agent or an online site is not always enough evidence to demonstrate that a property is genuinely available for rent.”

For more information on holiday homes, check out:

Related Stories:

How To Avoid Scammers This Tax Time
Holiday Homes: Savvy Investment Or No-Go Zone?

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Top Suburbs : stafford hts , ferntree gully , toowong , woolloongabba , east victoria park

go back

Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here