Tax deductions you can claim for your investment property.

Jul 16, 2021

Now the 20-21 financial year has come to an end, you’re probably getting ready to prepare your tax return. But did you know that when you have an investment property that is being rented out (or on the market to rent), you may be able to claim tax deductions for expenses related to that property? While we’ve listed some of the top tax deductions for investment properties in Australia below, we do recommend you speak to your accountant or financial advisor. 

1. Rental advertising costs 

Landlords need to find tenants or re-let properties and do so through a range of advertising. If you market your property using online, print media, brochures and signs, you can claim these advertising expenses against your income in the same year you paid for them.

2. Loan interest 

Investors can claim the interest charged on a loan for an investment property and any bank fees for servicing that loan.

3. Council rates 

Rates can be deducted in the year that they are paid, although you can only claim them during periods in which the house was rented.

4. Building depreciation

Depending on when your investment property was built, you may be able to claim a deduction on the depreciation of the building’s structure and any renovations you make to the property.

5. Appliance depreciation 

When offering a rental, landlords often install dishwashers, washing machines, air conditioners, stoves and other assets. Just like the building itself, these appliances decline in value and landlords can claim this depreciation over several years, usually in line with each asset’s “effective life”.

6. Repairs and maintenance

You can claim repairs as an immediate deduction if they relate directly to wear and tear. 

7. Garden and maintenance 

Property owners can claim the upkeep and replacement of plants and structures as an immediate deduction.

8. Insurance 

You can claim the cost of insuring a rental property. 

9. Bookkeeping costs

The numbers can become confusing with property investments, so most landlords have an accountant. You can claim the costs of advice, preparation of tax returns and expenses incurred for management of your rental accounts in the same year the costs were incurred.

10. Property Management Agent’s fees

Fees or commission paid to agents who collect rent, find tenants and maintain your rental are tax-deductible. 

11. Stationery and phone costs

Serving as a landlord is similar to running a business, and so the ATO will allow you to claim deductions for stationery, phone contracts, internet and electricity usage – as long as you only claim for the portion of these expenses that relate to your investment property. 

12. Legal expenses

Costs for legal advice and documents that relate to rental activities are tax-deductible. For example, if you are evicting a tenant or going to court over unpaid rent, then you can claim the costs of doing so, as well as the costs of preparing all relevant legal documents. This is general information only and  you should always seek professional advice relevant to your own circumstances.