End-of-Year Tax check list
With the end of the 2024–25 financial year on the horizon, property investors now’s the time to schedule in reviewing portfolios, tidy up tax affairs, and prepare for increased scrutiny from the Australian Taxation Office (ATO).
First and foremost, make sure your records are in order. Ensure you have detailed documentation for all expenses, such as:
- Loan statements
- Council rates, strata fees and any utility bills you pay for
- Insurance premiums
- Property management fees
- Repair invoices
- Depreciation schedules (obtained from a quantity surveyor)
Having all the records associated with your investment property to hand will help with lodging your return.
Stay compliant with ATO
The ATO has issued a clear warning to landlords: it’s cracking down on incorrect rental property deductions, and inaccurate reporting.
With its extensive data-matching program, it can now see where incorrect rental income has been underreported, properties have not been declared, or deductions have been claimed incorrectly.
Here are some common mistakes landlords make:
- Interest deductions
Many investors are wrongly claiming interest on the full mortgage amount, including personal-use loans. Only the interest on the portion of the loan used for investment purposes is deductible.
- Apportioning repairs and maintenance
Upfront deductions can only be claimed for genuine repairs or maintenance. Capital improvements—such as renovations or structural upgrades—must be depreciated over time, not claimed immediately.
- Capital Gains Tax (CGT) reporting
The ATO is matching data from property sales, including via agents and conveyancers. Undisclosed or under-reported capital gains are a major red flag and will trigger audits or penalties.
- Rental incentives and insurance payouts
Rent reductions and/or insurance payouts must be declared.
- Travel deductions
Most travel deductions for inspecting properties are no longer allowed.
- Ownership structures
If your property is jointly owned, ensure income and deductions are split correctly according to ownership percentage.
- Depreciation Schedule
A tax depreciation report from a qualified quantity surveyor can help unlock thousands in tax deductions, especially for newer or recently renovated properties.
For more information visit the ‘How to claim rental expenses’ on the ATO website.
What happens if you get it wrong?
The ATO is using sophisticated data-matching and AI technology to detect inconsistencies in rental schedules and property sales. Penalties for incorrect claims can include:
- Interest charges on unpaid tax
- Penalties of up to 75% of the shortfall
- Audits going back several years
Seek professional advice
Benefit from professional knowledge and experience by employing a financial specialist and using a property manager – both of which will be tax-deductible expenses.
- Financial specialist
Schedule time to meet with your accountant or tax adviser to ensure you’re compliant and making the most of available deductions. With the ATO increasing its focus on property investors, a proactive approach now can save you stress—and money—down the track.
An experienced accountant will know exactly what constitutes a repair, or a capital cost and will ensure your tax return is correctly lodged from the information you’ve given them. Furthermore, if you are using a registered tax agent to lodge your return, the deadline to lodge your return is a later than the 31 October 2025 cut-off date if self-lodging.
- Property manager
We know we’re biased but employing a property manager is not only a tax-deductible expense, but they can also help reduce the time spent preparing your tax return.
As well as saving you time with managing your investment property, such as finding a tenant and managing your maintenance, we also manage and correctly record the financial outgoings and rental income paperwork. We send a copy of this to you at the end of each month, and also a final one at year-end to give to your accountant.
With many of our team having investment properties themselves, we are always exchanging ideas and coming up with solutions. And we also give you the information to help you make informed decisions about your property.
If you want to know more about our property management services or investing in property, get in touch. Our motto is very simple – we treat every property as if it’s one of our own, and we’ve helped thousands of people realise their financial goals through property.
Our aim is to make your life easier and your property experience exceptional. Simply give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or call into our Cardiff office and meet the team.
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