What to claim on tax for your investment property?
Plenty of rental property expenses can usually be claimed on tax. Always check with your tax adviser, but things to claim on tax include:
- Advertising for tenants,
- Your accountant’s fees
- Interest on your investment loan
- Council rates, body corporate fees, land tax and strata fees
- Repairs, maintenance, pest control, cleaning and gardening
- Insurance on your rental property
- Depreciation on the building and some fixtures and fittings
Is stamp duty tax deductible? No – but it is included as a cost of buying the property, so it can help to reduce any capital gains tax payable if you sell the place for a profit.
Investment property tax benefits
Rental properties enjoy generous tax concessions and it’s important to know the things you can claim on tax.
Seek professional tax advice
Professional tax advice tailored to your circumstances is important. It lets you know what to claim on tax without breaking Tax Office rules. The cost of having your tax return professionally prepared is tax deductible.
Always maintain good records for your investment property. This will help maximise investment property tax benefits. 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.
How does negative gearing work?
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.
Negative gearing explained
If you’re looking to invest, you may have come across the terms ‘gearing’ or ‘leverage’ and wondered what they mean.
This quick video explains how negative gearing works.