Rental Property Owners: What can you claim?

When investing in a rental property, or wishing to invest in a rental property, you’ll need to keep records right from the start and work out what you can and can’t claim as a deduction.

What can you claim?

You can claim a deduction for your related expenses for the period your property is rented or is available for rent. The majority of rental properties have a mortgage against them and use a rental agent to help liaise with tenants.

Therefore, your typical expenses may include the following:

  • Rental agent management fees & petties
  • Cleaning/gardening
  • Advertising for new tenants
  • Council rates
  • Water rates & charges
  • Land tax
  • Insurance
  • Interest on loan, including prepaid interest
  • Depreciation expense on assets
  • Capital works deduction on building
  • Repairs & maintenance which does not include replacement of assets e.g. Hot water system

The above is indicative only as the actual deductions allowable depends on:

  • the dates they were paid,
  • whether they were reimbursed by tenants, or
  • whether a depreciation report is prepared (for capital works deductions on building).

Note that as of 1 July 2017 the ATO has disallowed the claiming of travel expenses to inspect, maintain, or collecting income for your investment property.

It gets tricky where the investment property:

  • was rented part year, or
  • being sold during the year, or
  • renovated during the year..

…as some expenses may be disallowed as deduction.

If you’d love to understand more about this topic and how to maximise your investment deductions, come and have a chat to us and see how we can help!