The Australian Financial Review --- Page: 57 : 6 August 2007 Original article by Mathew Dunckley
LexisNexis Summary
Some Australians think that they have found a good tax deduction. They buy a rental property and rent it at a low rent, then make a loss. They then claim the tax rebate for the negatively geared property. Frank Brass, of H&R Block, said that this strategy can be illegal, so it pays to talk to a tax expert. He noted that the Australian Taxation Office (ATO) is paying close attention to investment properties and the tax deductions claimed on them. He added that there are traps when renting a rental property to family and friends at a discounted rate. If the discount is at 20% of the going rate, it is only possible to claim 80% of the expenses. Brass pointed out that only repairs to a rental property can be claimed as tax deductions, not improvements.
