Holiday home owners are coming under the scrutiny of the Australian Taxation Office, as property investors skirt or misinterpret property rules when claiming tax deductions.
The tax office today said it is planning to write to holiday home owners, reminding them in particular that they cannot claim tax for periods when the property isn't being leased.
The ATO said it is paying close attention to excessive deductions claimed for holiday homes, maintenance claims made shortly after a home purchase, and interest deductions claimed for the private proportion of loans.
The tax office also said it was keeping an eye on husbands and wives splitting rental income and deductions for jointly owned properties.
"The ATO has seen instances where a husband and wife jointly own a property but split the income and deductions unequally to get a tax advantage for the highest income earner," the tax office said.
The ATO says what constitutes personal use or reasonable efforts to lease a holiday house are an area of confusion for investors.
"While the ATO will be paying closer attention to these issues in 2015, it will also be actively educating rental property owners about what they can and cannot claim," the tax office said.
The tax office has found instances where a taxpayer had made deductions for a holiday home despite no realistic efforts to let the property.
Other instances include claiming the whole interest amount on a refinancing, when the taxpayer should only have claimed the portion of interest relating to the property.