ATO Targets Expenses for Holiday Homes and Airbnb Properties
The Australian Taxation Office (ATO) has intensified its scrutiny of rental properties, particularly focusing on taxpayers who fail to report rental income accurately or calculate rental property deductions correctly. Here's what you need to know:
Key Areas of Focus:
Holiday Homes: The ATO has observed instances where taxpayers are overstating deductions related to holiday homes. This includes claiming expenses beyond what is allowable.
Short-Term Rentals via Online Platforms: Properties rented out on a short-term basis through online accommodation platforms like Airbnb, HomeAway, and Flipkey are under the ATO's radar.
Tax Obligations for Rental Properties:
Inclusion of Rental Income: Any payments received for renting out all or part of a house or unit must be included in the taxpayer’s assessable income.
Claiming Deductions: Expenses incurred in deriving rental income can be claimed as deductions. However, it's crucial to ensure that deductions are accurately calculated and only claimed for expenses directly related to rental activities.
Treatment of Holiday Homes and Airbnb Properties:
Entire Property Rental: If the entire property is rented out or genuinely available for rent throughout the income year, holiday homes and properties rented out through online platforms are treated similarly to any other genuine rental property.
Expense Apportionment: However, these properties are often utilized for purposes other than generating rental income. In such cases, taxpayers are required to apportion expenses incurred based on the property's usage to ensure deductions are claimed accurately.
Conclusion:
Taxpayers renting out holiday homes or properties through online platforms should ensure compliance with tax obligations. It's essential to accurately report rental income and expenses, avoiding overclaiming deductions. Seeking professional advice can help navigate the complexities of rental property taxation.
If you need help, contact Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.