The ATO has recently announced the results of its recent investigation into 300 random rental property claims. Alarmingly although tax agents were responsible for the preparation of 85% of these returns, errors were found in 9 out of 10 tax returns which resulted in the taxpayer owing further taxes to the ATO.
The main issues found were incorrect claims for interest on loans where the loan was used for both rental property and private use, incorrectly classifying capital works assets as repairs and maintenance and taxpayers not reducing their rental property expenses claimed when they have used the property themselves (i.e. holiday homes).
As such, we can expect to see the ATO ramp up its scrutiny on these returns over the coming year. If you need assistance in preparing the tax return for your rental property or want to ensure you are maximising your claims, please do not hesitate to contact us.