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Rental Properties and Deductions

  • Wednesday, October 09, 2019

Rental Properties and deductions: what you need to know

Are you a property owner confused about what you can or can’t claim for your rental property?

What you may not know, is that deductions are only viable during the time that you rented the property out or it was genuinely available to rent. Essentially, if the property is tenanted or if you’re actively seeking tenants, you can claim on some expenses…but not everything.

Don’t worry though, we’ve compiled a list of what you can and can’t claim on your rental property. Read more to find out.

Knowing the difference between what you can and can’t claim

Firstly, you’ll need to identify and maintain the relationship between the money you make and the deductions you claim.

It’s essential to look at the rules when it comes to repairs and maintenance, as this is an area the ATO is now carefully looking into. This is done through identifying the differences between repairs, maintenance and capital works.

As a landlord and property owner, it’s your responsibility to maintain the property. Repairs and maintenance can generally be claimed immediately. Deductions for capital works, however, is most often spread over a few years.

What are capital works?

These are building and engineering works that create an asset.

What can be claimed for your rental property?

Here’s what can usually be claimed:

-Interest on repayments for investment property loans and bank charges.

-Some of the interest expenses for a loan with multiple purposes. This includes acquisition and renovation of a rental property.

-A direct link between wear and tear of the property rented out and the cost of repairs. For example, the restoration of a broken toilet or fence damaged by previous tenants, to attract new ones.

-Deductions for sharing a room or house are similar to rental properties. Interest on your home loan, professional cleaning services, council rates, insurance and more can be deducted. Remember though, that these deductions need to be in relation to how much and how long you rent your home out.

What can’t be claimed on your rental property?

Here’s what can’t be claimed or has conditions:

-The actual entirety of the loan.

-If the property was empty of tenants while you’re renovating the property. Expenses throughout the renovation period will probably not be claimable if it wasn’t rented or advertised as available.

-Unfortunately, problems that existed at time of purchase (including ones you didn’t find out about until after purchase).

-These are NOT qualified as deductible repairs but are considered capital: Replacing an entire asset like an oven or hot water system, and improvements or extensions beyond restoring the property back to its former state.

-Renting out your holiday home to friends and family will have reduced deductions.

How Crest Accountants can help

There’s no denying that owning an investment property is a lot of work. Landlords of Australian rental properties have a duty to maintain the property, as well as be responsible for financials, taxes and utilities. Knowing where you stand as an investment property owner will put you in better control of your finances. Who knows? With the right help, from the right accountant though, you might even discover a deduction you hadn’t previously considered.

Need more financial advice for your rental property? Contact your local Gold Coast Accountant, Crest Accountants for advice today.


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