A Handy Guide to Rental Property Tax Deductions for Landlords


June 13, 2024

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Are you looking to make the most of your rental property tax deductions? Know this: there are more than 27 rental expenses you can claim. These include common costs like maintenance and insurance, as well as investment property tax deductions.

Understanding which expenses can shrink your tax bill is key for landlords. For example, you can deduct costs for keeping your property visible like advertising fees. However, some expenses, such as buying the property or selling it later, aren’t deductible. Knowing the rules can help you save more money.

Rental Expense Categories in Australia

Being a rental property owner means knowing what investment property expenses you can claim for taxes. Basically, expenses can be placed in three categories:

  1. Immediate deductions
  2. Claim over time
  3. Can’t claim at all. 

Knowing how to classify your expenses helps you get all the deductions you’re entitled to.

Rental Property Expenses You Can Claim Now

You can claim lots of expenses right away as part of your investment property tax deductions. These include finding tenant costs, council rates, and maintenance. You can also include pest control, gardening, and legal expenses. Remember, you can only claim these if the property is rented out when you spend the money.

Expense CategoryExamples
Property ManagementAdvertising, agent’s fees, legal expenses
Property MaintenanceRepairs, pest control, gardening, cleaning
Utilities and RatesCouncil rates, strata fees, water charges
InsuranceBuilding, contents, public liability premiums
Loan CostsInterest, bank fees, accounting fees

Expenses You Can Claim Over Several Years

Some costs can be claimed over a few years as part of an investment property tax deduction. This includes borrowing costs and building depreciation. 

Also, don’t forget about deductions for renovations, which can be claimed at 2.5% per year over 40 years for capital works improvements. If you bought your property post-9 May 2017, you can’t claim depreciation on used appliances, for example.

Expenses You Can’t Claim

Some costs can’t be claimed at all, like bills tenants have paid or for expenses unrelated to your property. 

Also, buying or selling costs, such as stamp duty, are not eligible for deductions. Additionally, as of 1 July 2017, you can’t deduct travel expenses unless it’s for a rental property business you manage. 

Get More Out of Your Rental Property Tax Deductions

As a landlord, you should always aim to maximise your rental deductions for better tax planning. By claiming all eligible deductions, your cash flow can enjoy a healthy boost, but you’ll need to be organised.

Always keep good records of your expenses. This includes fees for property management, repairs, insurance, and loan interest. If the property is also used personally, make sure to divide these expenses correctly.

Getting a professional property depreciation report, also known as a tax depreciation schedule, is a good idea. This report will find all depreciable assets, increasing your depreciation claims. Consulting with a quantity surveyor to prepare the tax depreciation schedule can maximise your tax deductions and improve cash flow. 

Remember, you can claim immediate deductions on many expenses. These include advertising for tenants, council rates, cleaning, and property agent’s fees. Also, prepaying expenses like landlord insurance can move your deductions forward to the current year.

Negative Gearing and Landlord Taxes

If your rental property is negatively geared, you can use those losses to lower your taxable income from other sources. This method can save you a lot of money on tax and boost your finances. However, remember that some expenses, like capital works and borrowing expenses, are claimed over time, not immediately.

Navigating Rental Expenses and Your Tax Return

When it’s time to submit your rental property tax return, you’ll need to list all the money you’ve made from renting. This means rent payments, booking fees, tenant reimbursements, and any insurance pay-outs for your property. 

Work out your net rental income or loss after you’ve deducted expenses. If the property is co-owned, divide the income and expenses fairly depending on each owner’s share.

When you sell an investment property, any profits or losses are worked out separately for your tax return. Because of all this, It’s important to keep good records all year round. You’ll need statements, reports, receipts, and schedules handy at all times, including:

  • income and expense statements
  • property management reports
  • loan details
  • co-ownership agreements
  • deduction receipts
  • a depreciation schedule
  • and valuations for capital gains tax.

Key Takeaways

  • There are over 27 potential rental property tax deductions to consider when filing your tax return
  • Expenses fall into three categories: immediately deductible, claimable over several years, and non-deductible
  • Advertising costs, council rates, and loan interest are some examples of immediately deductible expenses
  • Depreciation and capital works are claimed over several years, while acquisition costs are non-deductible
  • Careful record-keeping and tax planning strategies can help maximise your rental income tax deductions
  • Negative gearing and depreciation schedules are powerful tools for boosting your tax refund


What are the three main categories of rental property expenses for tax purposes?

Rental expenses fall into three categories for your tax return. These are claimable now, claimable over time, and not claimable at all. It’s key to sort your expenses properly for tax use.

When can you claim a deduction for rental property expenses?

You can deduct expenses for times when your property is rented out or ready to rent. But, not for costs related to non-rental uses or holding land without a valid reason.

What expenses can you claim an immediate deduction for in the year you incur them?

You can straightaway deduct many costs in the year you spend on them. This includes tenant advertising, bank fees, and cleaning. It also covers council rates, gardening, and insurance. Plus, you can deduct loan interest and legal fees, among others.

What expenses may you be able to claim over several years?

Some expenses can be claimed gradually over multiple years. These include borrowing expenses. Also, costs for building and appliance depreciation, and any major renovations. Such costs add to the property’s value over time.

What expenses can’t you claim for your rental property?

There are certain expenses that aren’t claimable on your rental property. For instance, tenant-paid bills like for electricity. Also, personal expenses, acquisition costs, and some vacant land holding costs. Make sure to understand what you can’t include in your deduction claims.

How can you maximise your rental property tax deductions?

Maximising your tax deductions involves several strategies. Always claim what you’re eligible for, including land tax, which is an annual property tax payable on the unimproved value of the land owned by investors. Keep detailed records. A depreciation report can also help. Besides, you can prepay some expenses and time your repairs and purchases. Negative gearing, property holding strategies, and claiming business travel expenses can also boost your deductions.

What income do you need to report from your rental property in your tax return?

Property investors must report every earning from their rental properties, including rent and fees. This income is then matched against your expenses. So, it’s important to detail all incoming payments.

How do you calculate and report rental income and expenses if you co-own a property?

For joint rental properties, divide the income and expenses based on ownership share. Any capital gains or losses from selling are handled the same way. Each owner reports their share in their tax return, ensuring they claim the appropriate tax deduction.

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