Expenses You Can Claim on an Investment Property in Australia

If you rent out your property or keep it genuinely available for rent, the Australian Taxation Office (ATO) lets you claim many expenses as tax deductions. These deductions fall into two main groups: those you can claim in the same financial year they occur, and those that need to be spread over a number of years.

Immediate Deductions (Claimable in the Year Incurred)

You can write off the full cost of the following items within the financial year in which the expense was incurred:

• Interest on Investment Loans: Only the interest element of your loan is deductible – not the principal.
• Property Management Fees: Costs paid to property managers or agents.
• Advertising for Tenants: Expenses related to marketing your property via online or print media.
• Council Rates and Water Charges: Deductible for the period your property is rented or available for rent.
• Land Tax: When applicable, depending on your state.
• Strata or Body Corporate Fees: Common with units or townhouses.
• Repairs and Maintenance: This includes necessary repairs and routine upkeep (excluding improvements).
• Cleaning and Gardening: Routine services such as lawn mowing or pest control.
• Insurance Premiums: This includes coverage for buildings, landlord, and public liability insurance.
• Legal Expenses: Costs related to tenancy disputes, evictions, or recovering debts.
• Administrative Costs: Includes phone bills, bank fees, stationery, and similar expenses.
• Utilities: When you, the owner, pay and are not reimbursed by the tenant.

Deductions Spread Over Several Years

For larger or one-off expenditures, the cost is deducted over a longer period:

• Borrowing Expenses: Costs such as loan establishment fees, LMI, and stamp duty related to the loan, which are spread over five years or the duration of the loan.
• Depreciation:
  • Capital Works (Division 43): A rate of 2.5% per year over 40 years applies to structural elements, including renovations.
  • Plant and Equipment (Division 40): Depreciation on assets like appliances, carpets, and blinds is claimed over their effective life.
• Quantity Surveyor Fees: For the preparation of depreciation schedules.
• Capital Improvements: Significant renovations or enhancements, which are not considered routine repairs.

Other Claimable Items

• Letting and Lease Costs: This includes expenses related to lease preparation, renewals, and advertising.
• Tenant-Related Costs: Costs for tribunal fees, lease cleaning, or tenant background checks.
• Property Investment Seminars: Deductions are allowed only if the seminar is directly linked to the management of your current investment, and not for general education or pre-purchase advice.

Key Points to Remember

• Availability for Rent: Deductions apply only during periods when your property is actually available for rent.
• Private Use: You cannot claim expenses if the property is used for private holidays or stays with family.
• Documentation: Ensure you keep all receipts, statements, and records to support your claims.
• Capital vs. Revenue Costs: Some costs, such as stamp duty on purchase, are not immediately deductible but may reduce your Capital Gains Tax (CGT) when you sell.

Common Claimable Expenses Overview

Final Advice

It is important to consult with a qualified tax accountant or a property tax specialist to ensure that you maximize your deductions while staying compliant with the latest tax rules. If you need assistance with your tax strategy, feel free to chat with our team for advice tailored to your specific situation.