The ATO is focusing on rental property owners this tax season. It is an area where they see a large number of mistakes, errors and false claims by people using their own property for personal holidays.

The ATO’s data matching technology enables them to identify incorrect rental property claims whether the mistake was deliberate or not. So it is very important that you keep records of rental periods that you are claiming.

Family and friends

You can only claim deductions for holiday homes that actually available for rent on the open market, not just available to friends and family. Private use is entirely legitimate although it does reduce an owner’s ability to earn income from the property.

You cannot use the property for your personal use or let friends and family stay rent-free and claim a deduction for those times. If you rent the property to friends or family at discounted rates, you can only claim deductions for expenses up to the amount of the income received.

The ATO also investigates cases where taxpayers claim that their property is available for rent but in reality, they have no intention of renting it out. This can be done by demanding rental rates that are well above market rates and by requiring unreasonable conditions for prospective renters.





Helen Boucher

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