Rental Property Tax Deductions

If you rent out your property or it is genuinely available for rent, you can claim deductions for most of the expenses you incur in these periods.

You only claim deductions for the expenses that relate to the income-producing use of the property.

You can’t claim a deduction for expenses for your personal use of the property.

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You can claim a deduction in the income year you incur expenses for your rental property that relate to the management and maintenance of the property, including interest on loans.

If your property is negatively geared, you may be able to deduct the full amount of rental expenses against your rental and other income – such as salary and wages and business income.

♦ Expenses – Immediately Deductible

♦ Expenses – Claimed over a number of years

♦ Expenses – That is not deductible

Rental Expenses – Immediate Deductions

Management & maintenance expenses

Advertising for tenants – directly by you or where the agent charged you

Body corporate fees or Strata Title fees and charges

# Special levies for capital works on a building can only be depreciated at 2.5%




Pest control

Security patrol fees

Rates & Taxes

Water rates, charges & usage

Council rates

Land tax

Property Agent

Fees/commissions – including GST

Postage & Petties

Statement fees

Bank charges/fees

Lease document expenses

Letting fees

Pest & Fire Alarm Inspections

Annual inspections to ensure pests, termites or smoke alarms

Installation of termite barriers or smoke alarms systems over $300, will need to be depreciated under Div 40

Administration expenses including

Stationery used to maintain your rental records etc.

Postage on documents relating to property management

Telephone calls relating to property management – ATO prefers to see a diary

Legal expenses relating to debt collection or tenant problems

Electricity & gas – were not covered by the tenant





Public liability

Settlement Adjustments on Purchase – see your solicitor’s settlement statement

Balance of council rates outstanding

Balance of water rates outstanding

Balance of body corporate fees outstanding

Repairs & Maintenance

(ongoing, initial & improvements)

Ongoing Repairs relating to wear & tear or damage resulting from renting out the property. The idea is that an expense is considered a repair when the functionality is being restored. Generally, repairs include




Initial Repairs – immediately after purchase Initial repairs – capitalised under Div 43 2.5%

Plant & Equipment under $300

Which overwise depreciated under Div 40 (ie) microwave for $183

Interest & loan a/c fees on loans to finance investment properties.

For the interest to be deductible the loan must have been applied to acquire an income-producing asset e.g. rental property Where loans are used for both investment property and private assets the interest has to be apportioned based on how much of the principal was used for which purpose. There needs to be a direct nexus between the debt interest and the related investment property, it not where the debt is, but rather why the debt exists!

Travel expenses –

Not allow for individuals, trusts or SMSF, however still available to companies, or those running a business or managing rental properties (ie) 10+

Inspect property

Maintain property

Collect rents

Quantity Surveyor’s Report

Cost of preparing a Quantity Surveyor’s report showing depreciation expenses

Special Building Writeoff

Property Seminars

Seminars – the cost of attending property investment seminars – only to the extent that they relate to operating or maximising the return on currently owned properties

Where money is spent on relevant seminars before any property is acquired, there will be no deduction available

Excessive cost may also be considered, with no deductible, (ie) $10,000 to learn how to get rich buying properties.


Rental Property Incone & Expenses Spreadsheet (XLSX)

Rental Property Incone & Expenses Annual Summary (DOC)

Order a Depreciation Schedule

Rental Expenses – Deduction over a number of years

Borrowing Expenses

deductible over the period of the loan where the loan or 5 years, which is the lessor.

Loan Application fee

Lenders legal fees

Title search fees

Lenders mortgage insurance

Stamp duty on mortgage

Mortgage registration fees

Depreciation on Plant & Equipment,

Div 43 Capital Allowance (see separate for complete list)

Supply and installation costs, (ie), stove $500 + installation $150 = $650

Depreciation of the building construction

Building Main Structure, walls, kitchens, bathrooms, hardscaping – ATO calls Div 43 Capital Works deduction at 2.5% flat over 40 years. Include initial repairs, and renovations within the 1st year to make the property fit for rental

Capital Improves, repairs that go beyond restoring to improving, (ie), replacing a fence, versus replacing a few planks.

Initial Repairs

immediately after purchase or within the 1st year, are capitalised under Div 43 at 2.5%

Rental Expenses – No Immediate Tax Deduction

Capital Costs associated with buying and selling, however are used to reduce a capital gains

On Purchase

Purchase Price – part of the Cose Base for any further Capital Gains on Sale (GCT)

State Government State Duty on Purchase

Legal / Conveyancing fees

Pest & Building on Purchase

Buyer Agent Fees

On Sale

Legal / Conveyancing

Agent Commissions & Advertising

Pre-Purchase Expenses

If no rental property was purchased, otherwise capitalised as part of the cost base for CGT.

Seminars to acquire properties

Due Diligence, Reports, advice prior to purchase

Vacant – Not available for rent

Holding costs on Holiday or rental properties not genuinely available all year round for rental, these costs form part of the cost base for CGT (3rd Element)

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