AUDIT PROTECTION

by Administrator 28. August 2014 19:15

With the Australian Taxation Office (ATO) crakcing down on investors, an insurance expert has suggested property managers could help landlords by paying property-related expenses such as rates and repairs directly.

RentCover landlord insurance general manager Sharon Fox-Slater said it was important for investors to make sure their affairs were in order given the highly complex tax rules around investment properties.

“Prevention is better than a cure when it comes to tax – investors need to keep accurate records and carefully research the deductions they are entitled to claim,” she said.

“If they do that, then audit should be quite straight forward.”

Ms Fox-Slater also suggested that property managers could help by encouraging landlords to allow them to pay property-related expenses such as rates and repairs directly.

“This can be a tremendous help when the landlord is preparing their tax, since it gives them an annual expense statement with most of the potential deductions recorded in one place,” she said.

Ms Fox-Slater said that investors with a number of investment properties, or those using unusual ownership structures, could consider taking out extra audit insurance.

Areas where the property investors can go wrong when it comes to tax time include confusing “repairs” with “improvements”, capital gains tax, combining travel to inspect properties with holidays, and claiming interest deductions for periods when the property is not available for rent, so it's important to get advice from a taxation specialist, according to RentCover.

“If the Australian Taxation Office comes calling on one of your landlords, it is worth reminding them to check their landlord insurance – some quality policies include cover for professional fees to help prepare for tax audit,” it said.

 

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