Investment Property Rental Expenses
- Arnold Shields
- Oct 12, 2010
- 3 min read
Updated: Jun 18
Owning an investment property can be a smart way to build wealth, but it's important to understand what expenses you can claim as tax deductions to maximise your return and stay compliant with the ATO.
Below is a breakdown of common rental property deductions available to landlords in Australia.
Deductible Expenses for Rental Properties
Advertising for Tenants
Only advertising expenses related to attracting tenants are deductible. Ads related to selling the property are capital in nature and added to the property's cost base.
Bank Charges
You can claim any bank fees on the account used for rent receipts and expense payments.
Body Corporate / Strata Fees
Be cautious not to double up. For example, if gardening is paid via your strata, you can't claim it separately as a gardening expense.
Cleaning Costs
If you hire a cleaner, that cost is deductible. If you clean the property yourself, you can only claim for cleaning materials, not your time.
Pest Control
Costs for fumigation or pest treatment services are fully deductible.
Council Rates
Only deductible if you're the one paying the bill, not your tenants.
Electricity and Gas
Claimable only if you're footing the bill, such as during vacancy periods.
Foxtel and Other Subscriptions
If you provide services like Foxtel as part of the lease, you can claim these costs.
Gardening and Lawn Maintenance
Tree lopping, fertilisers, and lawn mowing are deductible. Landscaping, however, must be depreciated over time.
Agent Fees and Commissions
Property management and leasing fees are fully deductible.
Water Rates
Deductible if paid by the landlord, not the tenant.
Security
Costs such as security patrols and alarm monitoring can be claimed.
Servicing Costs
This includes expenses for servicing heating systems, hot water systems, or air conditioning.
Quantity Surveyor Fees
The cost of obtaining a depreciation report is deductible.
Secretarial and Bookkeeping Expenses
Includes stationery, postage, and software used to manage the property.
Travel Expenses
Travel for inspections, rent collection, and maintenance is deductible, unless the travel includes a private component (which must be apportioned). Travel related to buying or selling the property is not deductible.
Telephone and Internet
Claim the portion of your phone or internet used for managing the rental. Initial connection fees are not deductible.
Land Tax
Claimable depending on the state and only if it applies to the property.
Tax Agent Fees
Accountant fees related to preparing your tax return that includes rental income are deductible.
Repairs and Maintenance
Repairs during the rental period that restore the property to its original condition (without improving it) are deductible.
Not deductible:
Initial repairs before the property is rented
Renovations, extensions, or structural improvementsThese are added to the cost base or depreciated.
Insurance
General insurance (home, contents, landlord) is deductible. Mortgage insurance is a borrowing cost and is amortised.
Legal Expenses
Deduct legal costs associated with rental matters (e.g., evictions, lease disputes).
Not deductible: Legal costs tied to the purchase or sale of the property.
Interest on Loans
You can deduct interest on loans used for:
Buying the rental property
Renovations
Purchasing depreciable assets (e.g. appliances)
Not deductible: Loan principal repayments or borrowing costs (these are separate).
Borrowing Costs
If over $100, borrowing costs must be spread over the shorter of 5 years or the loan term. These include:
Loan establishment fees
Title searches
Valuations
Broker fees
Lender's mortgage insurance
Stamp duty on the mortgage
What About Depreciation?
Depreciation is another major deduction for rental properties and will be covered in a future article. It includes wear and tear on assets like appliances and fixtures, and on the property itself.
Final Tips
To claim rental property deductions, always keep records. Ensure you don’t claim private expenses, and apportion any mixed-use costs. The ATO has strict rules, and a good accountant will help you navigate them to ensure you're not missing out or over-claiming.
Try our Negative Gearing Calculator to find out the after tax cost of your investment property and how many years until it becomes cashflow positive.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
