Stats from the Australian Taxation Office (ATO) suggest that more than 8 percent of Australians which is over 2.1 million people own an investment property.
This number has risen significantly in the last few years which has made it difficult for the ATO to keep precise and current records on investment property owners and also to weed out individuals that are trying to cheat the system.
Australians who rent out an investment property have the right to file a tax returns claim and this has caused a number of Australians to play around with their documentation and rental claims in order to get a rebate.
The ATO is aware of this as the Commissioner of Taxation launched a series of audits which showed that most tax rebate claims from investment property owners did not fit the profile based on Australian Taxation laws. The checkers from the tax office reported that as many as 9 out of 10 tax returns reviewed had errors.
As a result, investment property owners will have their claims closely scrutinized this year and it advisable for them to ensure that they have everything in order before they proceed to file it. They should consider taking the help of a professional tax consultant just to ensure that they get things done right the first time.
Property Investors Must Keep This In Mind
There are many so called property investors who are claiming tax refunds on the basis that they are renting out their property. However, many times these homes are not really rented out but given to family members who stay for free and sometimes the owners end up staying but claim it is being rented out.
The ATO has laid down the law and provided property owners with a four set criteria to help make their tax filing easier.
Advertising: Home owners, who have advertised their property via online sites, are safe because they have it on the market and it is up there for all to see. Whereas home owners who advertise their property through a business card, should have cause for concern as there is more reason to scrutinize their listings.
Condition: If your home is looked after and in good condition, it is a given that tenants will want to stay in in. However, if it is in a rundown condition, you are not very likely to get a tenant.
Terms: Home owners who have standard renting conditions are more likely to get a tenant, than those who have unreasonable conditions that will make it difficult to rent out.
Rejection Rates: If you are very fussy with the tenants you want to rent to, the ATO will keep a close watch on your property as it indicates you might not be very interested in renting out.