Missing tax deductions is like leaving money on the table. The ATO estimates property investors incorrectly report over $1 billion in rental deductions each year — and much of that is legitimate claims that investors simply don't know about.

This comprehensive list covers every deduction available to Australian property investors. Bookmark it, use it at tax time, and stop paying more tax than you need to.

Immediate Deductions (Claim in Full This Year)

These expenses are fully deductible in the financial year you pay them.

1. Loan Interest

The interest portion of your investment loan repayments. This is typically the largest deduction for most investors.

Important: Only claim interest on the portion of the loan used for the investment property. If you've refinanced and used some funds for personal purposes, you must apportion.

2. Property Management Fees

Fees paid to your property manager for ongoing management, typically 5–10% of rental income.

3. Letting Fees

The fee your property manager charges to find and place new tenants.

4. Advertising for Tenants

Costs to advertise your property for rent — online listings, signage, photography, video tours.

5. Council Rates

The full amount of council rates for the period the property is rented or available for rent.

6. Water Rates and Charges

Water service charges and usage (if you pay the tenant's usage).

7. Land Tax

State-based land tax is deductible in the year paid. Note: land tax is based on unimproved land value and thresholds vary by state.

8. Body Corporate Fees

Strata levies, including special levies for building maintenance or improvements. Both regular and special levies are deductible.

9. Insurance Premiums

Landlord insurance
Building insurance
Contents insurance (if you provide furnished property)
Public liability insurance

10. Repairs and Maintenance

Costs to repair damage or general wear and tear:

Fixing broken appliances
Patching walls
Replacing worn carpet (like-for-like)
Plumbing repairs
Electrical repairs
Roof repairs
Repainting (same colour scheme)

Important distinction: Repairs restore something to its original condition. Improvements make it better — those are capital works, not immediate deductions.

11. Cleaning

End-of-tenancy cleaning
Regular cleaning services
Carpet cleaning

12. Gardening and Lawn Care

Mowing, hedge trimming, garden maintenance — if included as part of the tenancy agreement.

13. Pest Control

Inspections and treatments for termites, rodents, cockroaches, etc.

14. Legal Expenses

Lease preparation
Debt recovery from tenants
Eviction proceedings
Dispute resolution

Not deductible: Legal costs for purchasing or selling the property (these are capital expenses).

15. Accounting and Tax Agent Fees

The portion of your tax agent's fee related to your rental property income and deductions.

16. Quantity Surveyor Fees

The cost of preparing a depreciation schedule. Fully deductible in the year paid, and typically delivers deductions worth many times the fee.

17. Bank Fees

Account-keeping fees on your investment loan account.

18. Stationery and Postage

Costs related to managing your property — paper, envelopes, postage for tenant correspondence.

19. Phone and Internet (Portion)

The portion used for managing your investment property — calls to agents, tenants, tradespeople; internet for checking statements and paying bills.

Deductions Over Several Years

These expenses are claimed over multiple years rather than immediately.

20. Borrowing Costs (Over 5 Years)

Costs to establish your investment loan, spread over 5 years (or the loan term if shorter):

Loan application/establishment fees
Mortgage broker fees
Lender's mortgage insurance (LMI)
Title search fees
Valuation fees (required by lender)
Mortgage registration fees
Stamp duty on the mortgage (not the property itself)

Example: $5,000 in borrowing costs = $1,000 per year for 5 years.

If you pay out the loan early, you can claim the remaining balance in that year.

21. Depreciation: Capital Works (Division 43)

Annual deductions for the building structure, claimed at 2.5% per year for 40 years.

Eligible items:

Walls, floors, roof
Built-in cupboards and wardrobes
Kitchen cabinets
Bathroom fixtures
Doors and windows
Driveways and fencing (if built after 27 February 1992)

Eligibility: Property must have been built after 15 September 1987.

Example: Building constructed for $400,000 = $10,000 deduction per year for 40 years.

22. Depreciation: Plant and Equipment (Division 40)

Removable fixtures and fittings depreciate over their effective life (varies by item):

Carpet (10 years)
Blinds and curtains (5–7 years)
Hot water system (10–12 years)
Air conditioning (10 years)
Dishwasher (7 years)
Oven/cooktop (12 years)
Smoke alarms (5 years)
Light fittings (5 years)

Important (2017 change): If you purchased a second-hand property after 9 May 2017, you can only claim Division 40 depreciation on items YOU purchase and install — not items already in the property.

To claim depreciation correctly, you need a depreciation schedule prepared by a qualified quantity surveyor.

Capital Expenses (Cost Base for CGT)

These aren't deductible against rental income, but they reduce your capital gain when you sell.

23. Purchase Costs

Stamp duty on property purchase
Conveyancing/legal fees
Building and pest inspections (pre-purchase)

24. Selling Costs

Real estate agent commission
Marketing and advertising
Legal fees
Styling and staging

25. Capital Improvements

Improvements that enhance the property beyond its original condition:

New kitchen
New bathroom
Extensions
Adding air conditioning (where none existed)
Structural renovations

These are added to your cost base (reducing CGT) and may also be depreciable.

26. Initial Repairs

Repairs to fix pre-existing damage or defects — problems that existed when you purchased the property.

Example: You buy a property knowing the roof leaks. Fixing that leak is a capital expense (added to cost base), not an immediate deduction.

What You Definitely Cannot Claim

The ATO specifically excludes these:

Acquisition costs as immediate deductions (stamp duty, conveyancing)
Loan principal repayments (only interest is deductible)
Private use portion (if you use the property yourself)
Expenses while the property is not available for rent
Travel to your rental property — since 1 July 2017, individual investors cannot claim any travel expenses to residential rental properties, regardless of purpose (inspections, repairs, rent collection, maintenance). This is a complete prohibition with no exceptions for individuals.
Renovations completed before first tenancy (capital expense)
Expenses paid by tenants

Common Mistakes That Trigger ATO Audits

The ATO has flagged rental property deductions as a focus area. Avoid these errors:

1. Claiming Improvements as Repairs

Replacing a functional kitchen is an improvement, not a repair — even if the old kitchen was outdated.

2. Claiming 100% of Interest After Refinancing

If you refinanced and used some funds for personal purposes (holiday, car), only the investment portion is deductible.

3. Claiming Depreciation on Second-Hand Assets (Post-2017)

If you bought a second-hand property after 9 May 2017, you cannot claim depreciation on plant and equipment that was already in the property.

4. Not Apportioning for Private Use

If you use the property yourself for any period (holiday home, between tenants), you must reduce your deductions proportionally.

5. Claiming Without Receipts

No receipt = no deduction. The ATO can request records going back 5 years.

How to Maximise Your Deductions

1. Get a Depreciation Schedule

Essential for any property built after 1987. The schedule typically identifies thousands in first-year deductions and pays for itself many times over.

2. Keep Every Receipt

Digital photos of receipts are fine. Use a system — folder, app, or property management software.

3. Review Rent Annually

If your rent is below market rate, you may be missing income AND paying more than necessary on a property that could be cash-flow positive.

4. Time Major Expenses Strategically

If you're about to move into a higher tax bracket, consider bringing forward deductible expenses. If you expect lower income next year, consider deferring.

5. Track Expenses Throughout the Year

Don't wait until June 30 to scramble for records. Track income and expenses as they happen.

Propperly automatically categorises your property expenses from bank feeds — no manual entry, no missed deductions →

Deductions Checklist

Use this checklist to ensure you're claiming everything available:

Immediate Deductions:

Loan interest
Property management fees
Letting fees
Advertising for tenants
Council rates
Water rates
Land tax
Body corporate fees
Insurance premiums
Repairs and maintenance
Cleaning
Gardening
Pest control
Legal expenses
Accounting fees
Quantity surveyor fees
Bank fees
Stationery/postage
Phone/internet (portion)

Deductions Over Time:

Borrowing costs (5-year spread)
Capital works depreciation (Div 43)
Plant and equipment depreciation (Div 40)

Cost Base Items (for CGT):

Purchase costs (stamp duty, conveyancing)
Selling costs
Capital improvements
Initial repairs

FAQ: Rental Property Deductions

Can I claim deductions during vacancy periods?

Yes, if the property is genuinely available for rent and you're actively seeking tenants. You cannot claim if it's vacant by choice or listed at an unrealistic rent.

Do I need receipts for everything?

Yes. Digital records are acceptable. Keep records for 5 years from the date you lodge your tax return.

Can I claim depreciation on an old property?

Possibly. Properties built before September 1987 generally don't qualify for capital works (Div 43), but may still have plant and equipment items (Div 40) — depending on when you purchased and what you've installed.

What if I've been missing deductions for years?

You can generally amend returns for the past 2 years (up to 4 years in some cases). A good accountant can review your history.

Should I do my own tax return?

Property tax is complex. Most serious investors use a tax agent experienced in property to ensure they claim everything correctly and avoid ATO issues.

Summary

26 potential deductions — make sure you're claiming them all
Immediate vs over time — understand which is which
Repairs vs improvements — the distinction matters to the ATO
Keep records — no receipt, no deduction
Get a depreciation schedule — it pays for itself many times over
Track throughout the year — don't scramble at tax time

Let Propperly track your deductions automatically — syncs with your bank, categorises expenses, generates ATO-ready reports →

Last updated: January 2025. This guide is for general information only and does not constitute tax advice. Consult a registered tax agent for advice specific to your situation.

26 Tax Deductions for Property Investors Australia | Propperly