Investment Property Deductions

Tax Return Online

You can claim deductions for your related expenses for the period your property is rented or is available for rent in your tax return.

The Rental Property Schedule Includes:

– Address

– Date property first earned income

– Number of weeks property was rented

– Ownership Percentage

– Gross rental income

Expenses Include:

– Advertising for tenants

– Body corporate fees

– Borrowing expenses

– Cleaning

– Council rates

– Assets purchased

– Gardening

– Insurance

– Interest on loan

– Land tax

– Pest Control

– Property agent fees / commission

– Repairs and maintenance

– Stationery, telephone and postage

– Water Charges

– Sundry rental expenses

– Depreciation report total deductions for Div 40(Plant & Equipment) and Div 43(Capital Works Allowance)

– Depreciation report fees

Note : If a real estate agency is managing your investment property, the real estate agent can provide a report for tax purposes showing most of the above income and expenses items.

You can’t claim:

– expenses not paid by you as water or electricity charges paid by the tenants
– acquisition and disposal costs, including the purchase cost, conveyancing and advertising costs.these are usually included in the property’s cost base, which reduce any capital gains tax if you sell the property
– GST credits for anything you purchase to lease the property – GST doesn’t apply to residential rental properties. When claiming the expense as a deduction, you can claim the total amount you’ve paid (inclusive of GST, if applicable).

Expenses may be deductible for periods when the property is not rented out if the property is genuinely available for rent that is:

– the property is advertised, giving it broad exposure to tenants
– considering all the circumstances, tenants can rent the property.

Apportioning expenses

You are required to apportion your expenses to determine the deductible amounts if:

– the property is available for rent for only part of the year
– Not all property is used to earn rent (only part of this property)
– the property was rented at non-commercial rates.

Property available for part-year rental

If you use the property for both private and income-producing purposes, a deduction can be claimed only for the portion of any expenditure that relates to the income-producing use.

Only part of the property is used for rent

If only part of the property is used to earn rent, only that part of your expenses that relates to the rental income can be claimed. Apportion your expenses on a floor-area basis – that is, based on the area occupied by the tenant, together with a reasonable figure for their access to the general areas, including garage and outdoor areas if applicable.

Non-commercial rental

Letting a property, or part of a property, at less than commercial rates – for example, renting to a family member at a reduced rate affects the amount of deductions you can claim.

Borrowing expenses

You can claim a deduction for borrowing expenses associated with purchasing your investment property, such as loan establishment fees, costs of filing mortgage documents and title search fees. Interest on the loan can be claimed immediately, it is not a borrowing expense.

If your total borrowing expenses are more than $100, the deduction is spread over five years or the term of the loan, which is less.

If the total borrowing expenses are $100 or less, you can claim a full deduction in the income year they are incurred.

You can claim the following as borrowing expenses:

– stamp fees charged on the mortgage
– loan establishment fees
– title search fees charged by your lender
– costs (including solicitors’ fees) for filing mortgage documents
– mortgage broker fees
– fees for a valuation for loan approval
– lender’s mortgage insurance, that is insurance taken out by the lender and billed to you.

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