What to know about property tax in AU

Investing in property requires a certain level of technical understanding and knowledge to reap the many benefits. One of the most important concepts and considerations that should be noted revolves around property tax. It's easy to forget about it or overlook the amount that will be needed to pay to the government, but that doesn't mean it's not necessary. The Australian Taxation Office (ATO) recently issued a warning to landlords and property owners to pay closer attention to their taxes.

A strict warning

In the country, there are over 2.2 million Australians who have property investments in one way or another. Any given year, investors can take up to $50 billion in deductions. In July 2022, the ATO  released a statement that was a strict warning for landlords to pay closer attention to their property taxes. They are promising a major crackdown on those who have previously been let out on a loose leash. Here are the main areas that they will be focusing on:

• Rental income.
• Property income.
• Deductions.
• Record-keeping of claims.

As an investor yourself, it's important to hire people you trust to use their expertise to your own advantage. We recommend hiring a reliable professional to help you manage the tax component of property investing.

How to prepare for audits

The ATO is most likely already conducting more audits than they have in the last year. It's best to be prepared for an audit situation, whether or not you think you will be audited or not. Here are some of the best ways to be in a desirable situation possible:

1. Match up paperwork and records.
2. Understand different claims you can make.
3. Always declare income, no matter how small.
4. Renting out rooms or smaller spaces.
5. Get your tax returns and the rental schedules in order.
6. Turn your taxes in on time, but be careful.

If you are an investor with many different sources of passive income, it can be easy to lose track of all the moving parts. But the ATO will be scrutinising your moves more carefully, so working with professionals who understand your situation is important.

Where previously the tax office couldn't process data fast enough, it has made some serious technological updates. This means that it can find unreported income more efficiently.

"The amount of data we access grows each year, making it easier and faster for us to spot any rental income that you have charged your tenants, but haven't declared," Assistant Commissioner Tim Loh reported.

If you are interested in real estate investment, reach out to Ray White Surfers Paradise today.