What you can claim as tax deductions
- •Loan interest — the interest on your investment loan is fully tax deductible. Often the biggest deduction investors claim
- •Repairs and maintenance — costs to keep the property in its current condition can be claimed in the year incurred. Note: capital improvements like a new kitchen are depreciated over time, not claimed immediately
- •Insurance premiums — landlord, building and contents insurance are all deductible
- •Strata levies and land tax — both generally deductible for investment properties
- •Property management fees — fully deductible
- •Council rates and water — deductible when the property is rented or genuinely available for rent
- •Depreciation — claim the decline in value of the building structure and fixtures over time
- •Advertising costs — listing fees and costs to find tenants are deductible
- •Accountant fees — the cost of preparing your investment tax return is also deductible
Depreciation — the hidden gem
There are over 200 items you can claim depreciation on — from the building itself through to carpet, appliances and light fittings. A Depreciation Schedule from a quantity surveyor costs a few hundred dollars but can save you thousands each year in tax.
Example: New carpet valued at $4,000 with a 10-year effective life = $400 claimable per year. The ATO recognises that assets wear out — so you can claim this decline in value even though you didn't pay cash in that tax year.
Capital Gains Tax discount
Sell your investment property after holding it for more than 12 months and the ATO only taxes you on 50% of the capital gain. So even in the top tax bracket, your effective CGT rate on the profit is roughly 24%.
One thing people get wrong
Capital improvements — like renovating a bathroom or adding a deck — can't be claimed immediately as repairs. They're treated as capital works and depreciated over time. Make sure your accountant knows which category each expense falls into.
Always work with a property-specialist accountant alongside your broker to make sure you're claiming everything you're entitled to — legally.
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