Landlords in Australia are set to come under more intense scrutiny from the Australian Tax Office this year, after annual tax deductions claimed on investment properties surged to $24 billion.
Singling out landlords, the Tax Office has released figures showing annual deductions claimed by more than 1.5 million Australians on their investment properties have reached $24 billion – more than double the amount reported a decade ago.
Economists say the resulting annual drain on tax revenue has climbed to about $5 billion.
Most of the landlords’ deductions relate to interest on investment property loans. Landlords are also able to claim property maintenance expenses against their income.
The Tax Office’s second-in-charge, Jennie Granger, said that from 2004 to 2006, the number of taxpayers with rental properties had increased by 100,000 to 1.6 million. Ms Granger said the Tax Office would be targeting people who have been in the investment property market for some time, and have made unusually high claims for interest expenses and other deductions.
Common errors by landlords included claiming on properties not genuinely available for rent, over-claiming for properties rented for only part of the year (such as holiday homes) and over-stating interest claims on loans taken out to buy, renovate or maintain rental properties.
In a speech in Sydney, Ms Granger said the Tax Office had completed more than 6800 reviews and audits of rental property claims this year, with $8.6 million in owed revenue identified, and $5.6 million collected.