Seek professional advice
It's important to get professional tax advice tailored to your circumstances as mistakes could mean losing concessions or bring you under Tax Office scrutiny. The cost of having your tax return professionally prepared is tax deductible.
A sensible golden rule is to keep good records for your investment property. Keep expenses for your home separate from those relating to the rental property, and hold onto the receipts for any expenses you claim on tax. These will be needed to prove your deductions if you’re ever subject to a Tax Office audit.
When it comes to investing, the term 'gearing' refers to borrowing to buy an asset. Most investors use some gearing in the form of their mortgage to fund their rental property. The loan interest is often a major expense but it can be claimed as a tax deduction when the property is tenanted or available to let, and this can significantly reduce the cost of the loan. See our section on negative and positive gearing for more details.