Alexi Neocleous
9th January 2023
Being a landlord is an attractive proposition. You can take out a home loan for an investment property, use the rental income to repay the home loan. You can then use whatever’s left for further investments.
But did you know there are many tax benefits attached to being a landlord? Many investors miss out on some crucial deductions because they complete their tax returns themselves and they don’t stop to ask, “What tax deductions can I claim?”
An accountant can help to answer this for you – but it’s also a good idea to research these deductions for yourself. Doing so ensures you can provide your accountant with all of the information they need to minimise your tax bill.
Tax deductions for investment properties in Australia
Property investment is tax effective in Australia thanks to tax breaks like negative gearing and many claimable deductions.
If you are a landlord, you are eligible for a number of deductions on your rental property at tax time.
You can claim two key types of deductions:
- Immediate deductions - for expenses incurred during the course of the financial year; and
- Deductions for expenses that you claim over the course of several years.
The Australian Taxation Office (ATO) provides a full list of the expenses landlords can claim on their tax returns. But here are some common tax deductions for landlords.
List of 5 common investment property tax deductions
Insurance costs
- Building insurance
- Contents insurance
- Public liability insurance
- Landlord insurance
Rental advertising and marketing costs
- Any marketing costs related to finding tenants
- Advertising costs like real estate website listing fees
- Cost of advertising in print, online, with signs, and more
Property agent fees and costs
- Commissions and fees paid to real estate agents while you own the property
- Property agent fees and commissions
- Tax Agent and bookkeeping costs
Any expenses related to borrowing/financing your investment
- Interest paid on the property
- Loan fees
- Mortgage discharge expenses
Rental property maintenance, bills, and utilities
- Lawn mowing and gardening bills
- Pest control
- Council rates
- Water, electricity, and gas bills
- Cleaning fees
- Council rates
- Installing new appliances (like solar panels or air conditioning)
- Servicing costs for smoke alarms and other appliances
Other costs
- Travel expenses related to maintenance and rent collection
- Stationary expenses
- Body corporate fees and charges, including strata
You will generally need receipts related when claiming these expenses at tax time. A tax agent can help you navigate tax deductions for your investment property.
What Can’t I Claim For?
It’s important that you know what you can’t claim for, especially if you complete your own tax returns. This ensures you won’t make any unwarranted claims that could cause issues with the ATO.
You can’t claim for:
- Disposal and acquisition costs related to the property like stamp duty you pay when you buy or sell the property and any legal costs you incurred during the transaction.
- Travel expenses, marketing, or agent commissions incurred as a result of buying or selling the property;
- Any bills that the tenant pays. For example, you cannot claim on the gas bill if the tenant pays it;
- Any expenses that are not related to the management of the property.
What to Do Next
With the help of a tax professional, you can claim all of the deductions you’re entitled to as a landlord. We also recommend you:
- Read about negative gearing and how it might benefit you;
- Find out how much stamp duty you’ll have to pay when you buy your property;
- Book in a quick call with our customer care team.
This information is general in nature and you should always seek professional advice when making financial decisions.
