If applicable to the 6-year absence rule, if the property being sold use to be the taxpayer’s home, they may be able to claim the main residence exemption in relation to some or all of the capital gain.
When vendors are selling properties for a contract price of $750,000 or over, they must acquire a ‘clearance certificate’ from the ATO. If they don’t provide this certificate to the purchaser, 12.5% of the consideration will be withheld by the purchaser and remitted to the ATO. Following the Foreign resident capital gains withholding rules.
Expenses that can be claimed immediately:
- Rental management fees
- Council rates
- Repairs
- Interest on loans
- Insurance premiums
- Depreciating assets while in good condition that cost over $300 e.g., a brand-new oven
Non-deductible rental expenses since May 2017:
Travel expenses – The costs occurred on e.g., car expenses, airfare, taxi, hire cars, public transport, accommodation, and meals when inspecting/managing rental properties. As well as any travel associated with earning rental income from your property.
Why is the ATO focusing on rental properties?
The ATO has placed a heavy focus on rental properties due to an increasing number of errors in tax returns reporting rental income and deductions found by the ATO’s random enquiry program. The random enquiry program is where the ATO at random selects a group of individual taxpayers who are not in business. This is where tax return data is matched to third party data. Taxpayers who are verified will not be manually reviewed.