Claimable Expenses for Your Rental Property

Many landlords aren’t aware of the variety of claims that can be made on expenses related to owning and running an investment property. With continued changes to the cost of borrowing and the tax landscape, it’s now more important than ever to maximize your investment’s potential.

Expenses You Can Claim

Insurance & Rates

You can claim back the full cost of insuring your rental property and the council rates associated with the ownership of the property.

Interest

Claiming interest costs for the lending associated with residential investment property is being phased back in after previous government changes. From 1 April 2024, landlords can claim 80% of their interest costs for funds borrowed for a residential property, regardless of when the property was acquired or when the loan was drawn down. From 1 April 2025, interest deductibility will be fully restored, enabling landlords to claim 100% of their interest costs.

Property Management Fees & Commission

The fees or commissions paid to property managers managing a tenancy on your behalf are 100% claimable. This includes services like full tenancy management as well as specific services like casual letting or rent management.

Accountant Fees

You can claim the fees charged by an accountant for your accounts to be managed, tax returns to be prepared, and advice. However, you can’t claim for any costs involved in the initial set-up of your rental property.

Legal Fees

Where your total legal fees for any given year are $10,000 or less, you can claim a deduction for the legal expenses involved with buying a rental property. If you’re in the business of providing residential rental accommodation, you can also claim legal fees incurred when selling a rental property from your portfolio.

Repairs & Maintenance

You can claim back the costs for any repairs to the property or general maintenance. However, if you’re doing the work yourself you can only claim for materials, not your own time. If the work is an improvement to the property rather than a repair, then you can’t claim that cost as an expense.

Depreciation

Depreciation is an allowance you can claim to cover the costs of wear and tear and general ageing of furniture and fittings you’ve bought for your rental property. You cannot claim depreciation on the property’s land or buildings.

Low Value Assets

If you purchase a low-value asset for your rental property ($1,000 or less) you can fully deduct the cost of that asset at the time of purchase, removing the need to depreciate the asset over its useful life.

Body Corporate Levies

If your rental property is an apartment in a unit title development you may be able to deduct body corporate levies from your rental income, however, it depends on what the levied funds will be used for. General levies like those used to pay for annual maintenance or administration (such as painting or insurance) will normally be deductible. Levies raised to pay for more significant capital improvements are not deductible.

Expenses You Can’t Claim

You can’t claim deductions for capital expenses, private expenses, or expenses that do not relate directly to your rental property.

• Capital Expenses: You can’t claim costs of buying a capital asset or increasing its value, such as the purchase price of the property and making improvements.
• Private Expenses: These are things you buy or pay for that are for your own benefit rather than to generate rental income.
• Initial Costs: Any initial costs associated with finding an appropriate rental property, including the cost of checking the condition of a property before purchasing it (e.g., a building report) are not deductible.
• Repairs on a Substandard Property: You can’t claim expenses incurred to bring rental property up to the required condition necessary before it can be rented.