The Australian Taxation Office is targeting more than 110,000 rental property owners who have been identified through last year's tax returns as making incorrect claims.

A team within the office known as ''the doctors'' is using sophisticated analytical techniques, including data mining, to identify unusual patterns of claims. It is also targeting work-related expenses.

Almost 1.3 million Australians own at least one investment property.

Rental property deductions have surged in recent years as investors prefer bricks and mortar to shares.

For the 2010-11 year, the latest for which data is available, almost $39 billion was claimed by landlords in deductions, an 18 per cent rise on the previous financial year. Investors are taking advantage of negative gearing, where the interest costs on the loan used to buy the property, and other costs, are greater than the rental income. The shortfall reduces the investor's income on which income tax is paid.