The Australian Taxation Office (ATO) is reminding rental property owners and their tax agents to take care when lodging their tax return this tax time.
ATO Assistant Commissioner Tim Loh explained that the ATO’s review of income tax returns show 9 in 10 rental property owners are getting their return wrong.
‘Landlords and their registered tax agents need to take extra care when lodging this year. We often see rental income being left out, or mistakes being made with property related deductions – like overclaiming expenses or claiming for improvements to private properties.’
‘When you are overclaiming expenses or claiming for improvements to private properties, you are taking money from the Australian community. Money that could have been otherwise used to further increase funding for things like women’s sports, schools and hospitals.’
‘We have a range of resources available on our website to help you get your rental right this tax time, including our top 10 tips to avoid mistakes,’ Mr Loh said.
Rental income
When preparing your tax return, make sure all rental income is included, including income from short-term rental arrangements, renting part of a home, and other rental-related income like insurance payouts and rental bond money retained.
‘Income and deductions must be in line with a rental property owner’s ownership interest, which should generally mirror the legal documents.’ Mr Loh said.
Rental income must be reported:
- in the year the tenant pays – not when your agent transfers it to you
- as the gross amount received (before property manager fees and other expenses your property manager pays on your behalf are taken out).
Mr Loh is reminding rental property owners not to double dip their deductions.
‘Make sure you are declaring your gross income. We have seen some clients declaring their net rental income after the property manager has paid their expenses and then they have claimed deductions like rates and repairs all over again.’
