Are you a property investor? Here are some important things that will be important to know coming up to tax time!
Yes, that time of the year is coming again; being prepared will ensure that you are well and truly ready.
Did you know that each year the ATO collects over a billion dollars every year in underpaid taxes, and in the 19/20 EOFY, nine out of every ten property investors made mistakes on their tax returns?
Some of the common errors seen included omitting rental income and making incorrect claims for property-related deductions, such as overclaiming for improvements.
⚠ This coming EOFY, the ATO is aiming to target interest expenses, so it is important to understand how to accurately apportion interest expenses when part of the loan is used for personal purposes or refinanced for private expenses.
? ATO Assistance Commission Tim Loh wanted to remind investors that they can only claim interest on a loan used to purchase a rental property with the intention of earning rental income. If any part of the loan is used for personal expenses (such as a holiday or a new car), only the portion relating to rental income can be claimed.
? A new data matching system introduced by the ATO allows them to obtain information on residential property loans from authorized financial institutions, which will allow them to cross-reference this data with their own records.
? The ATO wants to ensure that you are getting your tax return right and ensure that investors are claiming expenses accurately.
? It is always advised to go through a reputable tax agent if you don’t 100% understand your obligations and restrictions and know what you can and can’t claim when it comes to your investment property for your next tax return.
If you stay compliant, you can avoid potential penalties and unnecessary complications this tax time!