The Australian Taxation Office has reminded property investors to beware of common tax traps that can delay refunds or lead to an audit.
The most common mistake investors make is failing to declare all their property income, including capital gains from selling an investment property, according to the ATO.
Other common mistakes include claiming for interest charges on personal loan amounts and immediately claiming the full amount of capital works.
“If you take out a loan to buy a rental property and rent it out at market rates, the interest on that loan is deductible.
However, if you redraw money from that mortgage for personal use, such as buying a boat, or going on a holiday, you can’t claim the interest on that part of the loan,” according to the ATO.
“We also see taxpayers claiming capital works as a lump sum rather than spreading the cost over a number of years. Capital works include a new building or an extension, renovations or structural improvements.”
For more information, see the ATO’s investors toolkit and its depreciation and capital allowances tool.
Disclaimer:
Terms are subject to approved persons only. This information is true and correct as of 8/09/2021. All of the content above is general in nature and may not suit your personal needs, situation objective & goals.
