What Can You Claim?
As an Australian landlord, you can claim deductions for expenses directly related to earning rental income. Here are the most common deductions:
- Loan Interest: Often the biggest deduction - interest on loans used to purchase or improve the property
- Property Fees: Council rates, water charges, body corporate fees
- Insurance: Building, contents, landlord insurance
- Repairs & Maintenance: Fixing damage, painting, plumbing (not initial improvements)
- Property Management: Agent fees, advertising for tenants
- Depreciation: Capital works (building) and plant & equipment (appliances)
Repairs vs. Improvements
✅ Immediately Deductible (Repairs)
- • Fixing a broken window
- • Repainting existing walls
- • Fixing a leaking tap
- • Replacing broken floor tiles
❌ Capital Improvements
- • Adding a new deck
- • Renovating kitchen/bathroom
- • Installing air conditioning
- • Building a garage
Claimed over time via depreciation
Depreciation Explained
Depreciation is a non-cash deduction based on the wear and tear of your property:
- Capital Works (Division 43): 2.5% per year for 40 years on building construction costs (for buildings built after 1987)
- Plant & Equipment (Division 40): Appliances, carpets, curtains, furniture - claimed at varying rates based on effective life
- Get a Depreciation Schedule: A quantity surveyor prepares this ($300-$700) - worth it for properties under 40 years old
Negative Gearing
When your rental expenses exceed rental income, you have a “rental loss.” In Australia, you can offset this loss against your other income (salary, business income), reducing your overall tax. This is called negative gearing and is a common strategy for property investors.
⚠️ Important Notes
- • This calculator provides estimates only - consult a tax professional for accurate advice
- • Keep all receipts and invoices for claimed expenses
- • Apportionment required if property is only rented part-year
- • Different rules apply for holiday homes with personal use
- • Capital gains tax considerations when you sell