INVESTOR’S GUIDE TO RENTAL PROPERTY DEDUCTIONS

The Australian Taxation Office website offers detailed information for owners of investment properties.

https://www.ato.gov.au/Individuals/Investments-and-assets/Residential-rental-properties/

To help rental property owners identify what costs are deductible (and when) we have compiled the following lists to assist with your record keeping.

Expenses immediately deductible

Expenses where you may be able to claim an immediate deduction include:

·     Advertising for tenants

·     Bank charges

·     Body corporate fees and charges

·     Cleaning

·     Council rates

·     Electricity and gas

·     Gardening and lawn mowing

·     In-house audio/video service charges

·     Insurance (building, contents, public liability)

·     Interest on loans

·     Land tax

·     Lease document expenses (preparation, registration, stamp duty)

·     Legal expenses (excluding acquisition costs and borrowing costs)

·     Mortgage discharge expenses

·     Pest control

·     Property agent fees and commissions

·     Quantity surveyor’s fees

·     Repairs and maintenance

·     Security patrol fees

·     Servicing costs (i.e. servicing a swimming pool)

·     Stationery and postage

·     Telephone calls and rental

·     Tax-related expenses

·     Water charges

·     Note: ATO no longer allows landlords to claim travel and car expenses from 1 July 2017 

Expenses deductible over a number of years

There are three types of expenses you can incur for your rental property that can be claimed over a number of income years:

·     Loan setup fees

·     Plant and equipment purchases (such as curtains)

·     Capital works deductions/building depreciation

·     Note: ATO no longer allows depreciation of second-hand depreciating assets from 1 July 2017.

Expenses not deductible

Expenses that are not deductible include:

·     Acquisition and disposal costs of the property like stamp duty and settlement fees

·     Expenses not actually incurred by you (i.e. water or electricity charges used by your tenants)

·     The cost of your own labour in maintaining the property

·     Expenses that are not related to the rental of a property, such as expenses connected to your own use of a holiday home that you rent out for part of the year

Disclaimer: The information contained herein is not advice and is for general discussion purposes only. You should seek advice from a registered tax agent in regard to your personal situation.