Tax time can be a hidden trap for property investors. The right strategy can save thousands; the wrong one can lead to missed deductions and ATO issues. Here are five common mistakes — and how to avoid them.
1. Forgetting Depreciation Deductions
Many landlords overlook claiming depreciation on fixtures, fittings, and building structure. A quantity surveyor’s depreciation schedule can help maximise your claimable amount every year.
2. Mixing Personal and Investment Expenses
Keep your investment property finances completely separate. This simplifies record-keeping and ensures you can prove every expense to the ATO.
3. Overlooking Interest Deductions
Only the interest on your investment loan (not the principal) is tax-deductible. Ensure your accountant calculates this accurately based on your loan type.
4. Misclassifying Repairs vs Improvements
Repairs are immediately deductible, while capital improvements must be depreciated over time. Misclassification can lead to ATO adjustments or penalties.
5. Failing to Report Rental Income Correctly
With data-matching technology, the ATO now tracks rental income from platforms and agents. Make sure your reporting matches what’s lodged by your property manager.
At RENTED, we help keep your financial records clean and ready for tax time. Contact our team to learn how professional property management can simplify your accounting and compliance.
