Rental property tax deductions.

Many costs of owning a rental can be claimed at tax time, including the property management fee, council rates, insurance, repairs, loan interest and depreciation. What applies depends on your circumstances. This is general information only, not tax advice; confirm what applies to you with a registered tax agent and the ATO.

Common deductible expenses

For a property that is rented or genuinely available for rent, the following are commonly deductible. The exact treatment depends on your situation, so use this as a checklist to discuss with your accountant, not a ruling.

• Property management and letting fees
• Council rates, water charges and land tax
• Landlord insurance premiums
• Repairs and maintenance (see the distinction below)
• Interest on the loan used to buy the property
• Advertising for tenants
• Depreciation on the building and on eligible assets

Repairs versus improvements

This distinction matters. A repair that returns something to its original condition (fixing a leaking tap, mending a fence) is generally deductible in the year you pay for it. An improvement that betters the property beyond its original state (a new kitchen, an extension) is treated as capital and claimed differently, usually through depreciation over time. Getting this right is a common reason to involve an accountant.

Depreciation

You may be able to claim depreciation on the building's construction cost and on eligible plant and equipment such as appliances and carpets. A quantity surveyor's depreciation schedule is often used to support these claims. Rules around what is claimable have changed over the years, so this is one to confirm rather than assume.

Keep good records

Keep every invoice, statement and receipt, including your property manager's annual income and expenses statement, which summarises rent received and costs paid on your behalf. Good records make tax time simple and protect you if your return is ever reviewed.

Get advice for your situation

Tax outcomes depend on your income, ownership structure and how the property is used, and the rules change. Treat this guide as a starting point, then speak to a registered tax agent and rely on the ATO's rental property guidance for the current position.

This guide is general information only and is not tax, financial or legal advice. Everyone's circumstances differ. Consult a registered tax agent and the ATO before making decisions.

Common questions