Tax Considerations for Landlords

Focus on tax returns

According to a recent CPA Australia article, 2.2 million Australians will declare $48 billion in rent related income and claim $50 billion in deductions. According to the ATO, their focus in the 2022 year will be on over claiming and incorrect claiming in rental returns. Despite this, it is claimed by research firms that only 53% of Landlords plan to claim the deductions they are entitled to claim. With interest rates set to climb, it makes sense that a lot of investment properties will be running at a cash flow loss, but it is important to make sure that the rental section of your tax returns are completed professionally.

There are certain areas that are hotspots for the ATO, and one of the major ones is claiming for periods when your investment property is not available for rent. This covers time when you or someone connected to you uses the property for holidays etc. Any time (and expenses) when a property is not available for rent is excluded from the deductions available.

There are quite a few other areas where people can get into problems such as:

  • what is a repair and what is a capital improvement – the ATO may have a different interpretation to you
  • claiming for borrowing costs on new loans
  • using equity in your investment for other activities
  • travel to inspect your property
  • Depreciation and capital allowances.

It is critical to get the right advice at the right time and make sure you claim all the items you are legally entitled to claim.

If you need help with any of this, call, email or come to Coffee with OBB which is run twice a month.