For the third year in a row, the ATO will be cracking down on rental deductions in individual tax returns. While our tax agents can help you decipher what you can and can’t claim, here are our two things to keep in mind.  

Prove that your rental property is genuinely available to rent.

It may be obvious that to claim a tax deduction on a rental property that it must actually be for rent, but there are often errors made when lodging a tax return

To prove your rental property is available to rent, you must: 

  • Be able to prove a clear intention to rent it out, 
  • Be advertising the property, and at a similar rate to other properties in the area, 
  • Avoid unreasonable rental conditions. 

If either your friends, family or even yourself moved into the property for free during the financial year, then you won’t be able to claim deductions for that period.  

Also, if you were looking to sell during our red-hot property market and your rental property was vacant, then the deductions you can claim may be limited.  

Claim the correct amount of rental income.

One of the impacts of the pandemic on the rental market was that some property owners offered rent deferrals or payment plans to help their tenants. From a rental deduction POV, this impacts your deductions as rental income can only be included at the time it’s paid. If you had any rent deferrals or payment plans which were from the previous financial year but were not paid until after July 1 2020, then you can include it in your 2020-21 return. 

Don’t forget that if your tenant reimbursed you for any expenditure, then you need to include this as income in your return. 

How a tax agent can help you with your tax return

Knowing exactly what you can and can’t claim is difficult, particularly if you have a rental property. A tax agent is very well versed in all of this and you’ll not only save time but you may discover deductions that you didn’t know you were eligible for! 

Booking your tax return appointment

Our Swan Valley office have extended their hours from 19 July until 30 September to cater to a range of schedules. Appointments are open for booking now, so don’t wait to secure your time. 

If you’d prefer to chat with a Carbon tax agent from a different office, simply fill out our contact us form and we’ll be in touch!