Last year, the ATO identified a large number of mistakes with deductions for rental properties, particularly with regards to holiday homes, and has announced that it will be an area of focus this year.
“We’ve noticed some people are claiming deductions for holiday homes even where the property is not genuinely being rented out, or genuinely available for rent,” ATO assistant commissioner Kath Anderson said.
“There’s no problem with people using their rental property for their holiday, but holiday home owners need to remember they can only claim tax deductions for expenses made during a period when the home is rented out or genuinely available for rent.”
Ms Anderson said that the ATO will use technology and data to identify errors, and will scrutinise rental properties in popular holiday destinations in particular.
“Property owners should be aware that incorrect rental property claims will not go unnoticed,” Ms Anderson said.
“Technology enhancements and extensive use of data is allowing us to identify incorrect or suspicious claims. We also have a good idea of the locations likely to be used for holiday homes.”
Ms Anderson said owners of rental properties should take extra care when filing their tax returns this year and ensure they have sufficient evidence for any claims being made.
“Firstly, make sure that you declare all rental income and only claim deductions for periods that the property is rented or was genuinely available for rent,” she said.
“Secondly, make sure you have accurate records of expenses, and strong evidence of the property being rented or genuinely available for rent at market rates. Advertising through a real-estate agent or an online site is not always enough evidence to demonstrate that a property is genuinely available for rent.”