ATO Identifies Claims for Tax Deductions By Property Owners

The ATO has identified certain claims for tax deductions made by property owners, that are areas of concern when claims can be incorrectly made, and in particular the following big four.

Interest

Interest that relates to a rental property that is rented or available for rent is tax deductible. It is irrelevant what security is used for the loan. The ATO is concerned that claims are being made for all of the interest on loans where only part of the loan relates to the rental property or that the loan does not relate to the rental property at all. The question to ask is: Why was the borrowing incurred?. If the answer is: To buy an income producing asset, the interest should be tax deductible. Please note that interest may also be deductible when a property is being renovated with the view to its being rented. Interest may also continue to be deductible after the tenancy has finished.

Depreciation

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