Disclaimer:
First of all, like everything else on the first page of Google, this list is likely not maintained. Why? Google takes a while to index anything. By the time it makes there, some of it may not be relevant. That is why you need to contact your accountant or us with every one of the things you find on Google.
Disclaimer out of the way!
How to get a deduction to start with?
You can grab a quick tax deduction for certain expenses in the year you incur them, as long as your property is rented or up for rent. To get a deduction, you must:
Actually spend the money. No deductions if the tenant or someone else pays.
Keep good records to prove your expenses if asked.
Some rental expenses need to be spread out over years, like capital works and borrowing costs.
You can instantly deduct expenses like:
Advertising costs for tenants
Any body corporate fees
Council rates, water, land tax
Cleaning, gardening, lawn mowing
Pest control
Insurance (building, contents, liability, loss of rent)
Interest expenses
Pre-paid expenses
Property agent’s fees off the rental statements as you know
Repairs and maintenance
Legal expenses
Body Corporate fees
Body corporate fees and charges? You might score a deduction. But not all fees are fully deductible in the year you pay them.
Body corporate fees cover costs to manage and maintain common areas. These fees are set by strata title laws in different states and territories.
Fees might cover:
Day-to-day costs like insurance, garden upkeep, and management
Special funds for specific expenses like roof repairs or building insurance.
Regular payments to admin or sinking funds for ongoing maintenance count as service payments. You can deduct these right away.
But you can’t deduct special levies for capital improvements. Instead, you might claim a capital works deduction after the work is done. The cost must go to the special or general sinking fund if a special contribution is required.
Interest expenses make it or break it.
When you take out a loan for a rental property, you need to pay interest on the amount you borrow from your bank or lender. We refer to these as interest expenses. The principal amount is the money you borrow from your bank or lender.
If you use the principal amount to buy a rental property and it is rented or genuinely available for rent for the entire income year, you can claim a deduction for the interest charged on the loan.
You can only claim a portion of your interest expenses as a deduction if you either:
use a portion of the principal amount to buy your rental property
the property is rented or genuinely available for rent for part of the income year.
You can’t claim a deduction for additional payments made to reduce the principal amount of the loan.
Interest expenses you can claim can really help out. You can deduct interest on the mortgage used to:
Buy a rental property
Buy depreciating assets like an air conditioner
Cover deductible expenses like repairs
Finance renovations and extensions
You can also claim interest expenses if:
You’ve pre-paid up to 12 months in advance
Your property is uninhabitable during repairs
You can’t claim a deduction for interest expenses if:
The property is used for private purposes, even briefly.
Any part of the loan is used for private stuff, like buying a car, whether at the start or when you refinance.
You buy a new home with the loan and don’t rent it out, even if the rental property is the loan’s security.
Extra care with combined loaned accounts, please!
Got a loan for both private and rental expenses? Keep accurate records to figure out the rental property’s interest.
Separate the rental property interest from the private interest.
You can’t just pay off the private part of the loan. All repayments must cover both rental and private portions for the entire loan term. Need more help? Call an accountant (seriously, for everything else too).
Pre-paid Expenses
A pre-paid expense is a cost you pay now for services done later. For example, paying an insurance premium on January 1 for the whole year or interest on a loan.
You can claim an immediate deduction in the year you prepay if:
The expense is less than $1,000
The expense is $1,000 or more and covers 12 months or less (like an annual insurance premium paid mid-year).
The eligible service period is how long the service lasts under the agreement.
It starts either:
When the service begins
When you incur the expense.
It ends either:
-When the service stops
-After 10 years.
If your rental property pre-paid expense is over $1,000 and the service period is more than 12 months, spread the deduction over the shorter of:
-The service period
-10 years.
Repair and maintenance
epair and maintenance expenses cover costs to:
Keep your property in rentable condition
Fix wear and tear or damage from renting it out.
To deduct these expenses, the property must:
Be rented continuously
Be genuinely available for rent, even if unoccupied briefly (like weather cancellations or failed attempts to find tenants).
You can claim a deduction for these expenses in the year you incur them.
You can’t claim an immediate deduction for capital expenses. This includes:
Initial repairs for defects when you bought the property
Improvements or replacing entire structures like a fence.
These capital expenses can be claimed over several years.
Some of these you can claim immediately though
Repair and maintenance expenses cover costs to:
Keep your property in rentable condition
Fix wear and tear or damage from renting it out.
To deduct these expenses, the property must:
Be rented continuously
Be genuinely available for rent, even if unoccupied briefly (like weather cancellations or failed attempts to find tenants).
You can claim a deduction for these expenses in the year you incur them.
You can’t claim an immediate deduction for capital expenses. This includes:
Initial repairs for defects when you bought the property
Improvements or replacing entire structures like a fence.
These capital expenses can be claimed over several years.
Maintenance:
Maintenance is work to prevent or fix deterioration, keeping your property in good condition for tenants.
Examples include:
Repainting walls
Oiling, brushing, or cleaning items in good condition (like oiling a deck or cleaning a pool)
Maintaining plumbing
What you can claim over several years:
Certain capital repair expenses can be deducted over several years, such as:
Initial repairs (capital works)
Improvements (capital works)
Replacement of depreciating assets
For more info, see Rental expenses you can claim over several years.
Legal expenses:
Rental property legal expenses cover costs to prepare, register, protect, and manage your property.
You can deduct some legal expenses in the year you incur them, like:
Evicting a non-paying tenant
Court action for lost rental income
Defending against claims for injuries on your property
You can also deduct solicitor’s fees for loan documents as borrowing expenses. If borrowing expenses exceed $100, spread the deduction over the loan’s life or 5 years, whichever is less.
Most other legal expenses related to your rental property are capital and can’t be deducted. However, they may be included in the cost base when selling the property, such as:
Solicitor’s fees for buying or selling the property
Legal costs for resisting land resumption
Legal costs for defending your property title (e.g., against mortgagee action for loan default)
There’s obviously plenty more you can do than the above with the right structuring. Most accountants don’t do that for you. It’s a specialist area. If you’d like to see what we can do for you, contact us here.