Rental property tax deductions you can and can’t claim

Rental property tax deductions you can and can’t claim

The end of financial year is a busy time for property investors to review their investments and put together their receipts ready to lodge tax returns.            

Take a look at the list below and seek legal and financial advice from qualified professionals, to ensure you claim exactly what you are entitled to.


What you can’t claim

Expenses you cannot claim include:

  • Those relating to your personal use of the rental property
  • Utility bills paid by the tenant
  • Borrowing costs where you have borrowed against the equity in the investment property for private use
  • Costs relating to the purchase or sale of the investment property.

But remember, many of the costs relating to the purchase or sale of the investment property can be included in the cost base. For this reason, it is especially important that you keep detailed records of your spending from the beginning of your investment journey.


What you can claim

You can claim a wide range of running and management expenses against your investment property’s income, including:

  • Real estate management fees
  • Council and water rates
  • Advertising for tenants
  • Insurance
  • Interest on your investment loan
  • Reasonable travel expenses to inspect your property
  • Depreciation

In order to make taxation claims, you need to keep official documentation including receipts and bank statements (refer to the Australian Taxation Office website for a complete list of claims or talk to your Certified Practicing Accountant), and an accurate depreciation schedule and capital works schedule.

The depreciation schedule is a record of the property’s assets, outlining how much you claim in depreciation each year. A capital works schedule outlines building and construction costs, the cost of altering a building, the cost of capital improvements to the surrounding property and the amount you can claim each year. The relevant cost can be written off at 2.5 per cent each year over 40 years, and only if the rental property was built after 15 September 1987.

It is recommended that you use a quantity surveyor, who can put together a depreciation schedule. Using a professional such as a quantity surveyor can save you significant money in the long run as they are experienced in accurately valuing assets.

Records you should keep

Whether you prepare your tax return yourself or use a tax agent, you need to keep a record of the following:

  • Rental income and deductible expenses: Need to be kept for five years from 31 October or five years from when the tax return is lodged after 31 October.
  • Documents relating to ownership of the property including all purchasing and selling costs: These documents need to be kept for five years from the date you sell your investment.

By keeping all of these documents handy, it will be a lot easier to make accurate calculations and ensure you remain within the law.

If you’re uncertain or want to ask a question get in touch with our team: or

or call us on: 1300 854 552


Disclaimer: The information contained in this article is to be considered as general advice. It has been prepared and provided without taking into account your objectives, financial situation or needs. You should consider its appropriateness having regard to your own objectives, financial situation and needs. Before you make a decision, you should obtain and read a Product Disclosure Statement.

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