8 Rental Property Tax Deductions Australia Landlords Need to Know (and What You Can’t Claim)
- Future Accounting
- Aug 4
- 3 min read
Updated: Aug 12
Rental property tax deductions Australia: 8 key claims landlords can make
If you own an investment property in Australia, understanding rental property tax deductions Australia landlords can claim is essential. Getting it right could save you thousands and keep you out of the ATO’s audit spotlight.
With the ATO increasing its focus on rental properties, knowing what you can and can’t claim is more important than ever. So, what deductions are allowed? What are the common mistakes landlords make? Let’s break it down.
Common misconceptions about rental property tax deductions
Over the years, we’ve seen some recurring misunderstandings - and the ATO has as well:
Ownership dictates reporting: If your name is on the title, you must report rental income and expenses in your tax return - even if you share the profits informally with a spouse.
Loan repayments aren’t fully deductible: Only the interest portion of an investment loan can be claimed, not principal repayments.
Personal use reduces deductions: If you use your property for personal holidays, you can only claim expenses for the period it was genuinely rented.
Repairs vs improvements: Initial repairs or capital improvements aren’t immediately deductible. They fall under capital works and need to be depreciated over time.
What you can claim: immediate deductions
The ATO allows landlords to claim a range of operating expenses in the same financial year they are incurred. These include:
Interest on loans: Only the interest portion used for income-producing purposes.
Council rates & land tax: Fully deductible when paid.
Property management fees: Including advertising for tenants and agent commissions.
Repairs & maintenance: For wear and tear caused by tenants (e.g., fixing a leaking tap).
Insurance: Landlord, building, and contents insurance.
Utilities & services: Water charges, pest control, gardening, and cleaning.
Small assets: Items under $300 can be written off immediately.
Admin costs: Bank fees, phone, internet, and stationery for managing the property.
Capital works and depreciation: what you can claim over time
1. Capital works deductions (Division 43)
Structural improvements like renovations, extensions, driveways, and fencing.
Claimed at 2.5% per year over 40 years.
2. Depreciating assets (Division 40)
Covers plants and equipment like appliances, carpets, and blinds.
Claimed over their effective life.
Note: Since 9 May 2017, only new assets purchased for the property can be depreciated.
Travel expenses: what you need to know
Travel used to be a popular claim for landlords - but since 1 July 2017, individuals can no longer claim travel expenses related to inspecting, maintaining, or collecting rent for their residential rental properties.
Exceptions:
Corporate entities and SMSFs may still claim travel expenses in some circumstances.
If your property is managed by a real estate agent, their travel costs are deductible (as part of their fee).
What you cannot claim
Some expenses are off-limits:
Travel to inspect or maintain the property (for individuals).
Initial repairs or improvements before the property was rented.
Expenses for periods when the property wasn’t genuinely available for rent.
Any personal-use portion of costs.
Record-keeping and ATO compliance
The ATO requires you to keep detailed records for at least 5 years for all expenses to prove they relate directly to rental income.
Failing to maintain good records can result in disallowed claims - or worse, penalties.
Negative gearing: how it works
If your rental expenses exceed your rental income, you may have a net rental loss. This loss can offset other income (like salary or business income), reducing your overall tax bill.
Maximise your rental property tax deductions with expert help
With the ATO scrutinising rental property claims more than ever, getting professional advice is crucial.
Don’t leave money on the table. At Future Accounting Group, we specialise in helping landlords navigate complex ATO rules and claim every deduction they’re entitled to.
Book your consultation today and make tax time stress-free while maximising your rental property tax deductions Australia wide.
