Rental Property Taxes: The 3 Most Important Things You Need to Know

Own a rental property that generates income? Maybe you’re tossing up your investment strategies and buying a rental is on your list? While there are some great deductions that will boost your tax refund, the Australian Tax Office (ATO) has recently tightened the rules on rental property expenses.

With very little scope for mistakes, it pays to know what you can and can’t claim at tax time. Read on for a quick but comprehensive tax guide for investment property owners. As always, our certified tax accountants have taken the time to break down all the complex details into an easy-to-digest guide.

Rental Property Tax Deductions You Can Claim

You can claim a variety of expenses relating to owning and operating your rental property. These include:

  • Advertising for tenants in newspapers or on websites such as or
  • Bank fees for generating your rental income
  • Body corporate or strata fees (if you own a unit or townhouse)
  • Capital works to improve your property (you need to claim these through depreciation)
  • Cleaning your property at the end of the rental or lease period
  • Council rates to cover rubbish collection and street maintenance
  • Gardening and lawn mowing expenses you cover
  • In-house audio/video service charges
  • Insurance such as building, landlord, and contents cover
  • Interest on your mortgage (but not the principal you pay)
  • Land tax if you’re required to pay it
  • Lease costs such as preparation and registration
  • Legal expenses for maintaining your rental property or managing issues with a tenant
  • Pest control costs if you have mice, ants, termites or other pests present on your property
  • Property agent’s fees and commissions for renting out your property
  • Quantity surveyor’s fees for estimating the value of any construction costs
  • Repairs, maintenanceand servicing costs to ensure the property is in good working order for tenants
  • Stationery and postage costs to interact with your property manager or tenants
  • Tax-related expenses for managing your tax affairs
  • Telephone calls relating to your rental property or line rental for the property’s phone
  • Utilities such as water, electricity, and gas bills you cover

Rental Property Tax Deductions You Can’t Claim

You can’t claim these expenses for your rental property:

  • Household bills your tenant pays
  • The cost of borrowing against the equity in the rental property for private use
  • Expenses relating to personal use of the rental property
  • Costs of buying or selling the property, such as advertising, conveyancing, building inspection reports, travel to view the property, and stamp duty. These costs may form part of the cost base for Capital Gains Tax purposes. To learn more, visit our guide to what triggers a Capital Gains Tax event, or speak to your accountant for tailored advice.
  • Travel costs to inspect or maintain the property are no longer allowed as of 2017.
  • Second-hand depreciating plant and equipment if the assets were purchased after 7:30 pm on 9 March 2017 (yes, it’s that specific). This includes floor coverings, air-conditioning, appliances and other assets in the property at the time of purchase. Deductions for fixed and structural items are still allowed.

Beware of these special conditions

  • You can only claim expenses relating to your rental property for the period it’s rented out or available for rent. The ATO has been cracking down on investment property owners claiming tax deductions on properties they use as holiday homes.
  • If you only rent out part of your property, you can only claim expenses for that portion of your property.
  • You must keep proof of purchase for each expense in the form of bank statements, invoices or receipts. You also need to show your property was available for rent or rented during that financial year. If you’re claiming depreciation on assets or have undertaken capital works, keep the relevant schedule to show the ATO. Speak to your accountant for more information.

Need more expert tax advice for your rental property?

Congratulations! By reading this quick guide, you’ve taken a big step towards becoming a tax-savvy rental property owner. By keeping these tips in mind and staying organised, you’ll be well-equipped to roll into tax season with confidence. However, if you want perfect peace of mind, ITP’s friendly team of tax agents are here to help. We understand the intricacies of rental property taxes and can ensure you’re maximising your deductions and minimising your tax burden.

Don’t go it alone – contact ITP today for a stress-free tax experience and peace of mind knowing you’re getting the best possible outcome. Let’s turn tax time into tax time done right! 

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