"Tax time, Look OUT!!"



From: The Gow's

Hi all
Just found this on the ATO web site at
Take not of the last paragraph

Rental properties
A fifth of all investors under 45 years of age cite reducing tax through ‘negative gearing’ as a major reason for investing in rental properties, according to the Bureau of Statistics.

Negative gearing occurs when you borrow money to buy a rental property (or other investment) and the income you receive doesn’t cover your expenses. That is, you make a loss which you may be able to claim as a tax deduction.

"Rental income and deductions will be an area of focus for the Tax Office this year. We do want investors to receive the deductions they are entitled to," said Assistant Tax Commissioner Tony Goddard. "However not all expenses are allowed as tax deductions."

"The general rule of thumb is you can claim deductions for expenses incurred in gaining your rental income, provided the expense is not private or capital. Expenses you can claim are costs like interest, advertising for tenants, council rates, pest control and repairs, including the replacement or renewal of worn out or broken parts.

"Capital expenses which you cannot claim include the costs of buying or selling a rental property or the cost of adding another room. Nor can you claim expenses connected with your use of a holiday home you rent out for part of the year. This is a private expense.

"You may have to apportion expenses before claiming a deduction. For example, if your property is available for rent for only part of the year, say 6 months, then rates paid for the full year would need to be apportioned on a time basis - that is 50% would be deductible. Similarly, if only part of the property is available for rent, you would need to apportion expenses on a floor area basis," Mr Goddard said.

"Finally, make sure you keep good records of the income you receive," said Mr Goddard. "You must be careful to include all the rent your tenants give you."

For more information about the tax implications of rental properties make sure you read TaxPack 2000 carefully or talk with your registered tax agent, if you use one. You can get hold of the Tax Office booklet on Rental Properties by calling 1300 720 092.

The Tax Office will be writing to a cross section of rental property investors to offer assistance and remind them to take care in completing their returns.
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Reply: 1
From: Michael G


The only reason its the #1 reason for property investing, is because its the #1 way most promote property investing.

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Reply: 2
From: Dale Gatherum-Goss


No need to panic. This is standard stuff that the tax office trots out regularly to scare the ignorant.

As always, keep good records, seek advice, and prepare for that knock on the door. That way, when it happens you have nothing at all to fear.

As you might recall, I made available the tax office audit programme on rental properties a while ago. That offer still stands.


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Reply: 2.1
From: Owen .

I agree Dale. There's nothing to worry about if your not doing anything dodgy. This is standard stuff.

Someone once said "there are to many legal ways to make money to worry about the illegal ones".
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Reply: 2.1.1
From: Anonymous

problem is the minority give the rest a bad name...some people actually do the illegal as it is easier than the legal...
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From: Ian Parham

...and many thanks for sending me that info too Dale!
My apologies for not responding earlier.
Kind regards
Ian (NSW)
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