Do you own a rental property, and always want to maximize the tax refund using the rental properties, chances are you had been doing that for the many years you had owned the rental property, however, this year, ATO will focus its audit attention on the rental property tax return.
In the financial year 2018, ATO had issued $1.3million penalities to over 1500 taxpayers. We had written an article about the different type of penalties which ATO charge, as one of the most trusted accountant and tax agent in Ashfield and Inner West Sydney, we are here to help you to maximize your tax position with your rental property, while at the same time, ensure you are doing everything correctly.
ATO also claimed that they had found 9 out of the tax returns containing rental property have errors, hence they want to increase its audit to 4500 this year.
ATO had released its views on that they found that many rental property owners had either overclaimed rental deduction and/or under declare the rental income. In term of over claiming rental deductions, it would include claim travel expense for residential dwelling in the FY2018 tax return, when it is not allowed to; claiming interest expense on combined loan account, where one of the loan account the purpose is not for the investment property, this would include when you have a loan taken out for a owner occupied house, and later you refinanced it and top up and use that money to buy another bigger house, which you would use for owner occupied, and you would treat the first house as investment property.
On of the area of concern would also be depreciation expense, from 1 July 2017, second hand dwelling only can claim depreciation expense for building write off, and can not claim deduction for depreciation on rental property for plant and equipment, or non fixture. For new dwelling, it can claim deductions for depreciation for building write off and also on plant and equipment.
ATO also is focusing its tax audit attention on shared accommodation service like AIRNB and others, and they believe most of the landlord did not declare the income correctly.
Hence if you have a rental property, and is claimed deduction in the tax return, it is important to see one of the most trusted accountant and tax agent in Ashfield and Inner west Sydney, and we can help you to lower your tax and maximize the allowable deductions for the rental property. Talk to us on 0410-829-900, or email us to JC@endurego.com.