FRESH TAX RULES FOR LANDLORDS: What’s the ATO cracking down on this tax time?

Rental property income. 

It’s financially rewarding over time, and a great source of long-term security that comes with many tax benefits. But this tax season, it’s also one of four key areas the Australian Taxation Office will be cracking down on.

As tax time approaches every year, the ATO reveals the areas it will be keeping a close eye on – and amongst the recurring culprits of work-related expenses and record keeping, this tax season will place property claims – including rental deductions, income and capital gains – under scrutiny.

For 2.2 million Aussie landlords, it’s a heads up to know exactly what can be claimed as a property deduction, what income should be declared, and to get expenses and records right in order to avoid penalties.

So if you’ve contemplated claiming for when that rental was off the market and used as a holiday house by you or close family, consider this as your advice not to.

Generally speaking, rental property owners can only claim for expenses that they incur (and that are not paid by the tenant). 

To stay in the ATO’s good books, be sure to go through our landlord checklist below before lodging your tax return this year:

What landlords can claim

All rental income, such as:

  • Short-term rental arrangements
  • Renting part of a home
  • Insurance payouts
  • Rental bond money attained

Expenses, such as:

  • Council rates
  • Water charges
  • Land tax
  • Pest control
  • Property management fees & advertising for tenants
  • Body corporate fees and charges
  • Cleaning
  • Repairs (that directly relate to wear and tear)
  • Interest on loans
  • Insurance (building, contents, public liability)
  • Capital works
  • Depreciation on the building, such as fixtures and fittings

What landlords can’t claim

  • Borrowing expenses for the property, including stamp duty and legal fees
  • Any expenses paid by the tenant

If you’ve sold your rental property

The ATO states that when selling a rental, any capital gains or capital losses must be reported. It’s easy to make mistakes here, so to avoid this, it may help to engage a tax agent or accountant to do the calculations for you – and to ensure that any final expenses or depreciating assets are claimed within the last financial year that you owned the property.

For full details, see the ATO’s guide on CGT on sale of rental properties, or visit these resources below:

2022 Tax time toolkit for investors (ATO)

Tax time essentials (ATO)

Prudential Real Estate Campbelltown | (02) 4628 0033 |

Prudential Real Estate Liverpool | (02) 9822 5999 |

Prudential Real Estate Macquarie Fields |  (02) 9605 5333 |
Prudential Real Estate Narellan | (02) 4624 4400 |