As tax time approaches, Australian landlords are urged to be proactive in preparing their rental property expenses and ensuring compliance with tax regulations. Recent reports indicate that incorrect returns have been rife among property investors, prompting the Australian Taxation Office (ATO) to implement stricter measures. The ATO has issued a warning that there will be a crackdown on the 1.7 million Australian property investors utilising a data matching program, through 17 Australian financial institutions.
It comes as the ATO states as many as 90 per cent of all rental claims are incorrect. The data matching program will provide the ATO with independent, third-party verification of tax return information. Properties that have rooms available on platforms such as Airbnb and Stayz will also be targeted and could create capital gains tax issues. There is a strong emphasis on investors being careful not to understate your income or overclaim your expenses when you complete your 2023 tax return. Tax agents have also been warned that they will come under heightened scrutiny to ensure that all claims can be substantiated.
Our team here at Walkom Real Estate are experts at Property Management with over 60 years in the business. All our landlords receive a dedicated and experienced property manager backed by a skilled team using the latest technology. As the end of the financial year (EOFY) approaches you can have the confidence that all the record keeping has been done to the highest standard.
Here are our top tips for this EOFY season:
Understand and Organise Your Income and Expenses:
Maintaining a comprehensive record of rental income and expenses is crucial. Keep track of rent received and all related costs, including repairs, maintenance, property taxes, insurance, and other relevant expenditures. Accurate documentation and well-organised record keeping will not only facilitate tax preparation but also ensure that you claim eligible deductions while staying compliant.
Research your Tax Deductions & Obtain a Depreciation Schedule:
Thoroughly research and understand the tax deductions you may be eligible for as a landlord. Depreciation expenses, mortgage interest, property taxes, and other deductible items can significantly impact your tax savings. Being aware of these deductions will help you maximize your return while staying within legal boundaries. Establish a depreciation schedule that outlines all the depreciable assets such as building structure, fixtures, and fittings and identify eligible deductions over a specified period, typically up to 40 years. A quantity surveyor or specialist can help with this.
Ask the Professionals:
Our Walkom Real Estate Property Management Team can keep you abreast of all regulations that may impact your investment. In addition, engage a tax professional or accountant to assist with tax preparation. Remember, property management fees can also be claimed as tax deductions.
For more information:
Check out the ATO website and in particular visit https://www.ato.gov.au/Forms/Rental-properties-2023/?=redirected_rentalpropertyguide. Additionally, our own previous blog post provides a great summary of income and expenses https://www.walkom.com.au/tips-on-rental-property-expense-claims-for-tax-time/
Don’t hesitate to reach out to our Property Management Team who are only too happy to assist you.