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Investments property expenses you can claim for tax Deduction

Investments property expenses you can claim for tax Deduction

Whether you have purchased an investment property or you are looking to buy one, it is important to understand the tax concerns, including the deductions you can claim for investment property expenses. Here, in this simple guide, you get to know about what you can claim for a tax deduction and how they affect your text return.


When it comes to the tax benefits, an Investment Property Accounting is one of the highly tempting propositions for enjoying financial freedom. Being a landlord, you have various ways to minimise your annual tax bill, where these deductions are usually the difference between the negative and positive cash flow.


You must also know that you can claim deductions for your investment property tax only during the periods when your property was either used for business purposes. To get these deductions, you must have records to prove these expenses.


What does ATO want?


You can claim tax deductions through ATO (Australian Tax Office), so it is best to understand what exactly ATO wants from you. ATO says that if you have rented out your property, you must:


  • Keep records of everything from the beginning
  • Know what investment property expenses you can claim as deductions
  • Know whether you have to pay tax instalments all through the year or not
  • Declare all income from rented property in your tax return
  • Consider the capital gains tax implication if the property is sold with Property Investment Accountant


What expenses can be claimed as deductions?


Here is the list of investment property tax return expenses that you can claim for tax deductions.


Rental advertising costs

You need to use a variety of advertisement methods to find tenants. If you use an online property platform, print brochures, media and signs, these advertising expenses can be claimed in the same year in which you have paid for them.


Loan interest

You are eligible to claim the interest charged on loan for your investment property. You can also claim any bank fees for servicing that loan with the consultation of property tax accountant.


Council rates

Council rates can be deducted in the year in which they are paid. But, you can claim council rates only for the periods when your house was rented. You can also claim interest repayments, but you cannot claim repayments on your loan’s principal.


Land Tax

As long as you rent your investment property, you can claim a deduction for land tax. But, this concept differs from one state to another as well as the timing when you claim the cost. The best idea is to get a Investment Property Tax Advise to make sure that you will claim the accurate amount in the right year.


Strata fees

If your investment property has strata title, you can claim a deduction for strata fees. But, if these fees include maintenance and garden expenses, you have no right to claim these expenses separately.


Building depreciation

You can claim a deduction on the building depreciation. But, it completely depends on when your investment property was built. If your investment property was built before 16 September 1987, you would not be able to claim building depreciation on the original construction costs. If it was built after this date, you can claim depreciation on the cost of 2.5% annually for 40 years. It means if a building was built in 2000, you can claim a depreciation deduction until 2040.


Appliance depreciation

Sometimes, when a landlord rents out his property, he usually installs dishwashers, washing machines, cabinets, air conditioners and other assets. So, just like building depreciation, you can also claim appliance depreciation over several years. But, it can only be possible on assets when they meet certain criteria. Like, you can claim deductions on brand new and second assets in your investment property if they are bought before 7:30 on 9th May 2017.


Repairs and maintenance

You can also claim a deduction for repair if it is related directly to wear and tear. Suppose you have replaced a few broken roof tiles after a storm or repair an appliance. You can claim to hire a professional to repair these jobs. But, if you replace an appliance, it will be claimed as a depreciation deduction.


Pest control

Pest control deduction can be claimed depending on who paid for this service, a tenant or a landlord. You can claim an immediate deduction for the cost of hiring a pest control professional.


Garden and maintenance

You can also claim the maintenance and replacement of plants as an immediate deduction. But, you are not allowed to claim the costs of new plants or other changes that can add more value to your investment property.



Being a landlord, you have the right to claim the cost of insuring your investment property. For this, you require referring to the quarterly statements for the exact amount, or you can request an annual breakdown from your insurer.


Bookkeeping costs

It is difficult to manage everything with property investments, so many landlords prefer having an accountant who keeps records of all transactions. You can claim deductions for the expenses incurred for managing your rental accounts in the same year. But, you cannot claim the cost of preparing your personal tax return.


Agent fees

You can claim the fees or commission paid to real estate agents who have found tenants, collect rents and maintain your rentals.


Stationery and phone costs

ATO allows you to claim deductions for stationery, internet, phone contracts and the electricity consumption. You can only claim for a certain portion of the expenses that are related to your investment property.


Travel costs

You cannot claim the cost of travelling to inspect your investment property or to carry out repairs. This rule is applied to landlords who have a business of property investing.


Legal expenses

You can claim a deduction for the cost of legal advice and documents that are related to investment property. Suppose you are evicting your tenants or you are going to court for long unpaid rent. You are eligible to claim the cost of doing these activities and the cost of preparing all legal documents for these activities.


Capital gains tax discount

You have to pay Investment Property tax on the profit when you make a capital gain on the sale of investment property. If you buy or sell the property within one year, it will increase the income tax you pay.


If you hold the property for more than 12 months before selling it, you can claim for a capital gains discount of 50%.


You must have the proper information about investment property expenses you can claim. Taking professional advice is always profitable before acting.

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