Common mistakes property investors should avoid: ATO reminder

August 5, 2021
The ATO is reminding property investors to take care when submitting their tax returns. Assistant Commissioner Tim Loh said the ATO have adjusted more than 70% of the 2019–20 returns selected for a review of rental information. He shares the most common mistakes rental property and holiday homeowners make when submitting their tax returns:
  • Neglecting to declare all their income – this includes failing to declare any capital gains from selling an investment property.
  • Rental deductions that seem unusually high – the ATO is scrutinising returns that are questionable using its data analytics. Property investors should expect claims denied without proper receipts or for making ineligible claims to start with.
  • Interest charges on personal loan amounts – interest on a loan or money redrawn from a rental property mortgage for personal use, such as buying a boat, or going on a holiday is not deductible.
  • Immediate claims for the full amount for capital works – the cost of capital works including a new building or an extension, renovations or structural improvements should be spread over a number of years.
  • Rental income during COVID-19 – as a general guidance, rental income should only be declared as income in the financial year in which the amounts are received.