ATO say landlords should be mindful of common tax mistakes

The ATO's review of income tax returns highlighted the common mistakes investors and owners were making with particular focus on interest expenses where part of the loans were used for private purposes.

Other common mistakes included rental income being left entirely out of returns, as well as errors in property related deductions like overclaiming expenses or claiming for improvements to private properties.

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Harcourts Launceston director Jeremey Wilkinson, whose business manages properties across the region, said these mistakes were extraordinarily common.

"What can be done to alleviate this sort of confusion is to receive an end of year tax statement from your property managers," Mr Wilkinson said.

"That will give a comprehensive list of things which have happened on the property which can be claimed against.

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"Making sure that it is ready before the end of the financial year is integral and the time to be asking your agents is now."

Australian Taxation Office Assistant Commissioner Tim Loh said the ATO was continuing to prioritise these areas and to "help you get your return right".

"We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return," Mr Loh said.

"You can only claim interest on a loan used to purchase a rental property to earn rental income - don't forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income."

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The ATO reports that 87 per cent of individual rental owners use a registered tax agent to prepare their income tax returns.

The ATO provides sophisticated data matching capabilities which include rental property-related data and has recently implemented a new residential investment property loans data matching program for use by landlords.

More information can be found at the ATO website.

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