Are you a savvy rental property owner? If so, let's stay one step ahead as we embark on a new financial year and pay attention because the ATO has its sights set on rental property owners like you.
According to the ATO, 86% of landlords are making errors in their tax returns, even when using a registered tax agent.
My latest video dives into the ATO focus areas to help you safeguard against potential audit reviews.
It's crucial to turn our attention to the treatment of invoices and receipts for tax returns. The ATO has highlighted specific focus areas for tax returns with rental schedules, emphasising the need for accuracy and comprehensive documentation.
Here's a snapshot of the ATO's key focus areas and what you need to consider:
Repairs and Maintenance: It is pivotal to understand the distinction between repairs and capital improvements. While repairs can be immediately deducted, capital improvements must be depreciated over the asset's effective life.
Deduction Substantiation: Proper documentation, such as detailed receipts and invoices, is essential to substantiate deductions. A mere bank statement may not suffice to prove the nature of the expense.
Interest Deductions: The deductibility of interest on an investment property loan depends on the purpose of fund redraws. To claim deductions effectively, it's crucial to link the redrawn funds to income-generating activities related to the properties.
Stamp Duty and Land Taxes: Stamp duty is of a capital nature and isn't deductible when purchasing a property. Land tax obligations have witnessed recent changes, stressing the importance of timely registration to manage future tax implications.
Navigating these intricacies can be complex, but I'm here to offer guidance and support in preparing your tax return with rental schedules. Feel free to reach out with any questions or concerns.
Wishing you a successful start to the new financial year.
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