You might have more to fear from your neighbour than the ATO | Tax & Property Depreciation Schedule

You might have more to fear from your neighbour than the ATO

News

October 2024

They’re watching you. Your neighbours, that is. In the 23-24 tax year, the ATO received tip-offs about dodgy dealings from more than 47,000 people. In the last 5 years, there have been more than 250,000 tip-offs. You can read more about that here.

The ATO pitch this as largely ordinary people wanting to right wrongs that affect the broader community, sort of a community spirited act. But often grudges are a bit more focussed than that and very close to home.

And often they concern rental properties.

Of course, it’s not just the ATO who receive tip-offs from ‘interested’ parties. Local councils and state governments also gladly accept information that can make their compliance roles easier.

As a property investor you need to make sure you stay on the right side of everyone, and that’s becoming increasingly harder. 

If you need a Depreciation Schedule, you can stay on the right side of the ATO by using a reputable provider like us. We’ve been doing this for over 20 years and have never had any issues. You can make an enquiry here


Key Points

  • Short term rentals are a rich source of angst and therefore tip-offs from disgruntled neighbours result.
  • The first home owner grant is also monitored by state governments – and neighbours.
  • Commercial properties being used in ways that contravene a lease is usually more of a problem for a tenant, but when a tenant gets into strife, the property owner often ends up being disadvantaged.

A neighbour peering through their hedge at the house next door, rented out on a short stay rental platform. Neighbours are the ones who monitor and report on people breaching the per day cap with short term rentals.Short term rentals

We have written before here about how the ATO monitors the income from short term rentals to make sure it’s being declared. 

But how else do people who own short term rental properties get into strife?

There is a cap in many areas on the number of days in a year a property can be rented out short term. In some places, it’s as little as 180 days in a year.

A client mentioned recently they were turning their long term rental into a short term one to capitalise on the anticipated revenue boost. They wanted us to add some furniture to the Depreciation Schedule we did for them some years ago.

In conversation, we flagged the restriction in that area on short term rentals, and their reply was, ‘Pffttt. Sure, but who’s going to know?’

Our reply? ‘Your neighbours will know.’ Neighbours are the ones who monitor and report on people breaching the per day cap with short term rentals.

And what about that furniture? Unless the furniture is brand new, it can’t be depreciated. The ATO is awake to people moving used furniture into a rental property and depreciating it – not hard to catch people out on that.

This affects people who use their holiday home over, you know, the holidays. ‘Personal use’ of a property affects the depreciation of not only furniture, but also Assets like appliances, floor coverings, air con etc.

Before heading down the short term rental path, talk to your accountant, or us, about the potential pitfalls.


A new housing estate. Neighbours in new housing estates are expecting new property owners who have used the First Home Owners Grant to move in. So if you don't, they may get suspicious.First Home Owners Grant

It’s very tempting to claim a grant – and then fudge the facts.

People see it as sort of a ‘victimless’ crime. They rationalise it by saying to themselves, ‘Well, I’ve paid taxes for years, so this is my chance to get something back.’

We wrote recently here about how the state governments can monitor this through data matching from property managers, but neighbours also monitor it.

New housing areas are often places where grant recipients buy and then supposedly live for at least 6 months.

If handover for a property occurs and then nobody shows up to live in it, it piques the interest of neighbours – especially in these times of limited rental vacancies.

Interest increases when somebody pops around weekly or so to collect mail that has been directed to the property to maintain the ruse of occupation. 

All it then takes is for a neighbour to feel slighted in some way and the property owner will be getting a few enquiries from interested parties. Of course, they may not have done anything wrong, but nobody appreciates scrutiny and having to explain themselves.


Two commercial warehouse units, side by side with blue roller doors.Commercial

Owners of commercial properties are often fairly hands off. They have long leases managed by agents and the tenants usually take care of outgoings.

It can be a trouble free arrangement, except when it isn’t. And that can be when a tenant does something that upsets a neighbouring tenant. And when a tenant gets into strife, the property owner often cops it, too.

We have seen it all. We’ve done many Depreciation Schedules on commercial properties and clients often talk to us when it all goes wrong. They don’t always want advice, sometimes they just want to vent.

As in most strata properties, disputes over parking can tip people over the edge. We had a client whose tenants were taking up an inordinate number of parking spaces on common property with cars lacking number plates that sometimes never moved – or that moved piece by piece. It was as if they were using the carpark as a wrecking yard. That made them unpopular with their tenant neighbours.

It didn’t really surprise anyone when it turned out that the cars had been stolen and the tenancy ended abruptly with our client left dealing with a bit of a mess. Pity, because at least those tenants had been very prompt paying their rent.

Another time, a tenant’s visitors made him unpopular with his neighbours. They were apparently a bit ‘sketchy’. It was the smell that really tipped off the neighbours, that and the fact that the roller door was never, ever opened. The hydroponic cannabis operation when exposed was apparently very impressive and again our client, the property owner, was left with a problem. And again, that tenant had been very good at paying their rent – in cash.


Questions? Call Depreciator on 1300660033 and our friendly team will help you with your enquiry.Feel free to give us a call anytime. Maybe just to vent. Or if you have a question about depreciation. But certainly if you need a Depreciation Schedule for a residential or commercial property. Order online now or call us on 1300 660 033 and rely on our 20-plus years of experience in estimating depreciation returns.

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