The Advertiser - Real Estate - - Front Page - ANTHONY KEANE Anthony Keane is the edi­tor of Money Saver HQ, which ap­pears in The Ad­ver­tiser on Mon­days.

REAL es­tate in­vestors are rub­bing their hands to­gether in an­tic­i­pa­tion. Their favourite month of the year is al­most here.

That’s right, folks — July. Tax time, to be pre­cise. While most people shud­der at com­plet­ing a tax re­turn, property in­vestors see it as a chance to snag a handy cash wind­fall.

A year of in­ter­est pay­ments, coun­cil rates, in­sur­ance and main­te­nance costs can fi­nally be claimed back through tax de­duc­tions.

Lat­est fig­ures from the Aus­tralian Taxation Of­fice show about $8 bil­lion of rental property de­duc­tions are claimed each year, so it’s a big pot of money to share.

How­ever, greed is not good in this in­stance. And it could be dan­ger­ous to your wealth.

The ATO says it is in­creas­ing its fo­cus on rental property de­duc­tions this year, and it has warned that its ad­vances in tech­nol­ogy en­able it to now check ev­ery Aussie’s tax re­turn for un­usual claims.

Mis­takes, whether in­no­cent or de­lib­er­ate, can lead to un­pleas­ant penal­ties.

The ATO says com­mon er­rors made by rental property own­ers in­clude:

Claim­ing rental de­duc­tions for prop­er­ties not gen­uinely avail­able for rent;

Over­stat­ing in­ter­est de­duc­tions for loans taken out for rental prop­er­ties;

In­cor­rectly claim­ing de­duc­tions for hol­i­day homes, that are only avail­able to rent for part of the year.

Wrongly claim­ing de­duc­tions for re­pairs and main­te­nance on spend­ing on im­prove­ments such as per­go­las and bath­rooms. These are cap­i­tal im­prove­ments and should be writ­ten off over sev­eral years.

While some in­vestors may be tempted to claim too much, many oth­ers fail to claim what they are legally en­ti­tled to.

De­pre­ci­a­tion is the best de­duc­tion for property in­vestors, be­cause writ­ing down the value of cur­tains, car­pets and build­ing costs sucks no money from your pocket but still po­ten­tially pays thou­sands of dol­lars. How­ever, many people don’t de­pre­ci­ate prop­erly, or at all. Get a de­pre­ci­a­tion re­port on your property from a quan­tity sur­veyor. These cost about $600 and are tax de­ductible.

Also read the rental prop­er­ties guide at

ATO tech­nol­ogy im­prove­ments have made it fool­ish to try to cheat the tax man. But don’t cheat yourself by be­ing for­get­ful or ig­no­rant.

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