Landlords are being warned by the Australian Tax Office (ATO) to pay close attention to their rental income declarations and deductions this financial year as part of four areas it will be keeping a close eye on[i].

Rental property owners are being reminded to include all the income they have received from their investment, as well as insurance payouts and rental bond money retained.

Assistant commissioner Tim Loh has said while many rental property owners used a registered tax agent to help with their tax affairs, he encouraged landlords to keep good records, as all rental income and deductions need to be entered manually, which a tax agent could help with.

“If we do notice a discrepancy, it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return,” he said.

“We can also ask for supporting documentation for any claim that you make after your notice of assessment issues.”

The ATO has also warned they can ask for supporting documentation after a notice of assessment has been issued.

The ATO is also setting its sights on capital gains from property.

Capital gains is the difference between what a quality, well-located property cost, and the money you gain once you dispose of it.

So, if you have sold your rental property during the financial year it pays to ensure this is correctly documented in your tax return.

Following and satisfying the three golden rules of claims was important, the ATO has warned.

1. You must have spent the money yourself and weren't reimbursed.
2. If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income.
3. You must have a record to prove it.

For advice on your rental deductions, declarations and capital gains, please contact your accountant today.

[i] https://www.ato.gov.au/Media-centre/Media-releases/Four-priorities-for-the-ATO-this-tax-time/