It’s no surprise with the amount of investment property tax benefits available, many people are dipping their feet into the property market. Tax deductions help offset the costs of owning, maintaining, and renting out a property. Let’s break it down.

Interest on Loans

A significant perk among tax deductions for investment properties is claiming interest on loans. If you’ve borrowed money to buy, renovate, or repair your rental property, you can claim the interest as a deduction.

However, you can’t claim the actual loan repayments (the principal) or any interest on loans used for personal expenses, even if they’re secured against your investment property. Here’s a tip: keep clear, accurate records to make the most of this deduction without any headaches when tax time rolls around.

Property Management and Maintenance

Maintaining a rental property comes with ongoing expenses, many of which can be claimed as investment property tax deductions. These costs must be directly related to managing your rental property to qualify for a deduction.

Common deductible costs include:

• Advertising for tenants (e.g., online listings, signage)
• Property agent fees for managing tenants and rent collection
• Body corporate fees for shared properties (e.g., apartments)
• Pest control services

Rates, Taxes, and Insurance

Several recurring costs fall under tax-deductible expenses, making it easier to manage the financial burden of property ownership. This includes any fees the local council charges for services such as waste collection and water rates.

Depending on state regulations, homeowners can also claim land tax as long as they have rented out the house on their property. As this varies from state to state, consulting an investment property tax accountant is a smart move, ensuring you’re submitting the correct claim. Plus, tax benefits for your rental property include claiming premiums for building, contents, landlord insurance, public liability, and loss of rent coverage.

Depreciating Assets

Another investment property tax deduction that can be claimed immediately is assets $300 or less used in the rental property. This could range from light fittings and smoke alarms to curtains or door locks.

Tax Deductions for Investment Properties Over Several Years

There are tax benefits of rental property that aren’t immediately deductible in the same year they’re incurred but can be claimed over time.

Borrowing Expenses

When you take out a loan for an investment property, there are costs beyond the interest. Many of these expenses can be claimed as tax deductions—but instead of an immediate write-off, they’re spread out over five years. For example, your loan establishment fees, mortgage insurance, or title and search valuation fees.

Capital Works

Investment properties naturally wear down over time, but the ATO lets owners claim tax deductions for this decline through capital works and depreciation. Capital works deductions apply to buildings and structural improvements that help generate rental income.

Maximise Your Investment Property Tax Benefits

Understanding what you can and can’t claim as tax deductions for investment properties can change how you manage costs and maximise returns. Unsure about deductions and want to make the most tax-efficient choices? Get in touch with a tax return accountant at JCB Accounting for professional guidance tailored to your property portfolio.