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How to Lower the Audit Risk of Investment Property Tax Return by Using Rental Agent

The Labor Party is advocating to change the negative gearing policy in the next election, the proposal changes would involve limiting the deductibility of rental loss against other assessable income to new properties only, however, whether that particular legislation can be passed is still a question mark.

Lower the audit risk of investment property tax return by using a rental agent

Many of us tend to want to rent out our investment properties ourselves to save on some rental agent fee, however, never do we realize, that if we do that, sometimes we can complicate our situation in the tax audit time. If our investment properties are subject to a tax audit, the Australian Taxation Office would want to see the evidence of the income being received, and such evidence would be bank statements and rental contracts sometimes. However, if ATO gets a hold of your bank statement, sometimes, there might be a surprise, as they might be able to find other avenues not included in the initial tax audit. The second fallback is that if you do not have a proper record-keeping habit, and when the Australian Taxation Office audits you, you might not be produce those records to ATO, then you will run a very high level of audit risk in terms of substantiation evidence.

The biggest benefit of using a real estate agent to rent the property is that the fees you pay to the real estate agent are deductible for the financial year.

Also, they will provide a rental statement to you at the end of the financial year, which equates to the summary of the income and the expenses, and sometime you can get the real estate agents to pay for the water and other fees, and they normally will keep the receipts for you, hence in the tax audit time, if you had lost the invoices, a copies of the invoices will be with the real estate agents.

As one of the most trusted and professional tax accountants and tax agents in Ashfield Sydney, we will be able to look after your investment properties tax return, we will provide a 10mins free tax review for your past tax returns with investment properties to see whether your investment property tax return is done correctly.  Please give us a call at 0410-829-900, or email us at