Tax office tightens rules for landlords

A TOUGHER tax time looms for Australia’s 2.1 million real estate investors.

A new government ban on deductions for landlords’ travel-related expenses, plus the axing of many depreciation deductions for second-hand properties bought since May last year could cost investors thousands of dollars.

But tax deductions can be made by those who pay genuine expenses before June 30 – the Australian Taxation Office has warned it is watching property closely.

H & R Block director of tax communications Mark Chapman said the ATO would focus on:

• Excessive claims for interest expenses,

• Incorrect claims for new property purchases, and

• Holiday homes not genuinely available to rent.

“The ATO has access to numerous sources of third party data including popular holiday rental listing sites … so it is relatively easy for them to establish whether a claim that a property was available to rent is correct,” Mr Chapman said, adding that many landlords felt aggrieved by the ban on travelrelated deductions.

This rule change was announced last year to combat rorts by some investors who claimed big deductions for visiting investment properties in sunny holiday locations, but it affects all landlords.

“The vast majority of people are those driving 5-10km across town because the tenant complained there was a leaking tap or the toilet was blocked,” Mr Chapman said.

Terri Scheer Insurance executive manager Carolyn Parrella said despite the changes, landlords often overlooked legitimate expenses, including body corporate fees, home office expenses, landlord insurance and property managers.

Ms Parrella said the ATO had warned that incorrect claims would not go unnoticed.

“Even the most fastidious landlords could come under scrutiny from the ATO for oversights in their bookkeeping,” she said.