Landlords to be targeted

THE Australian Tax Office has landlords firmly in its sights and is conducting a series of audits to catch out the unwary and dishonest, warns the Aust-ralian Society of CPAs.

The Society said the number of investment property owners in Aust-ralia had increased dramatically over the past ten years.

Many people for the first time are returning an income from investment properties and claiming back money they spent on property.

The tax office has found many investors are making similar mistakes.

In the coming year there will be 8,000 audits of rental properties.

Areas under scrutiny include:

• Excessive claims for travel to inspect properties. Investors can claim a deduction for expenses incurred travelling to inspect a rental property. However, the tax office will crack down on people who abuse this deduction by claiming the full costs of a holiday they have taken in which only part of the time was spent inspecting the property

• Jointly owned properties. A common problem occurs where a property is jointly owned but income and expenditure is returned in only one name

• Claims for repairs and maintenance. Landlords are able to claim a tax deduction for repairs and maintenance to their investment property. The tax office has set rules for what you can claim so if you are unsure, do not guess – seek professional advice

• Claiming interest. Investors are able to claim a tax deduction for the interest they have paid on the mortgage for an investment property. However, many investors are making the mistake of roughly estimating the interest they have paid

• Claims for depreciation. Investors are able to depreciate the cost of some items in the home over a period of time. That is, they are able to claim a tax deduction, usually over a number of years, for the money they or a previous owner has spent on some items in the investment property such as stoves or carpets. A common mistake occurs where an investor buys a property and then tries to claim a tax deduction for the new replacement cost of existing items.

Landlords need to keep accurate records and, importantly, seek professional advice from their CPA if they are uncertain about what to do.

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