“People are claiming expenses for times when they actually use their house for themselves, or their friends or family use the house. It’s not okay. So it’s really about making sure that you only claim the parts associated with any rent.

Kasapidis said that if investors received any form of relief in the form of grants or support from the state government, that was also taxable and should be reported as income as a general rule.

There are more than 2.2 million Australians who own rental property investments and claim over $50 billion in deductions each year, according to tax statistics 2018-19.Credit:

Property Tax Specialists founder and senior adviser Shukri Barbara said investors should also be wary of excessive claims when renting their property to friends or family at below-market rents.

“Some people rent to relatives at below market value, and they want to claim the interest. It is not acceptable if you are claiming less than market rent, then you can only claim the amount of rental income you receive,” Barbara said.

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He said investors should also be careful not to confuse claims between repairs, which are deductible, and improvements, which claim depreciation over time.

“For example, if you’re fixing a palisade on a fence, that’s a repair. But if you replace the entire fence, you claim amortization on the improvement.

“A repair is something you can fix and you can get a full deduction for the service you paid for. But if it’s replacing major items like roofs, that will be part of the improvement. Once you use new materials on a big job, it’s an improvement.

Barbara warned investors to be meticulous in their record keeping as the ATO relies on its auditing capabilities.

“Every year they progress a bit with the technical ability to chase things. If the ATO calls you and asks you a question, they already have the answer. Make sure your documents and records match what you are going to claim. The tax authorities already have all the answers.

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Barbara also said the ATO checks short-term rental platforms to confirm if they are actually being rented at reasonable rates, rather than inflated prices that leave the property vacant.

Real Estate Institute of Australia president Hayden Groves said investors should be in a good position if their properties are managed by agents.

“Our members are real estate agents, and they maintain precise systems within their own agency to account for every dollar and penny that passes,” Groves said.

Groves said the ATO is paying particular attention to vacation rental income, warning investors to be vigilant and not to overstate deductions.