May 22, 2017 10:09:33 AM

Rental property tax deductions: a guide for Australian landlords

Topics: Mortgage, Tax year, Financial Year End, Tax Deductions, Australia Budget 1

It’s almost the end of another tax year. If you’ve recently bought an investment property or you’ve caught the Airbnb bug and you’re renting out part or all of your home as a holiday rental, it’s important you know exactly what you can and cannot claim for on your tax return. Here are some of the things you need to be aware of as a landlord at tax time.

More Australians are becoming landlords

A large number of Australians became landlords in 2016/2017, either through the purchase of a rental property, or by renting out part or all of their home in an Airbnb-type letting situation. That number continues to grow, and the Tax Office has advised it would be closely scrutinising claims made by landlords.

Claims fall into two categories – expenses that entitle you as the landlord to a tax deduction in the year in which you incur the expense, and expenses that can be claimed over a number of years. Your accountant or tax agent will be able to help you determine which of these categories your claim falls into.

What you can claim

There are several expenses relating to the running and management of your investment property that you can claim. You’ll find a comprehensive list of these on the Australian Taxation Office website. Ensure you keep all of your receipts and proof of purchases pertaining to these expenses should you be audited.

Here is a list of the expenses landlords can claim back:

  • Body corporate fees and charges
  • Borrowing expenses
  • Cleaning, gardening and lawn mowing bills
  • Council rates and land tax
  • Depreciation on assets like whitegoods and air conditioners
  • Advertising for tenants
  • Legal and interest expenses
  • Insurance (building, contents, public liability)
  • Pest control
  • Repairs and maintenance, including servicing costs
  • Property agent fees and commissions
  • Water charges
  • Reasonable travel expenses to inspect your property or collect the rent

What you can’t claim

Here are some guidelines to expenses that cannot be claimed as a tax deduction:

  • Expenses relating to your personal use of the rental property
  • Utility bills paid for by the tenant
  • Borrowing costs where you have borrowed against the equity in your investment property for private use
  • Costs relating to the purchase or sale of the investment property: conveyance costs, advertising, agent commission, legal fees and stamp duty on the purchase and sale
  • Expenses not related to the rental property

Apportioning expenses

Remember, if your investment property is only available for rent for part of the year, or you’re renting out a room in your home, you’ll need to apportion your expenses accordingly. You’ll only be able to claim for the portion of expenses that relate to the income you earn on your rental.

Get professional advice

If you are considering becoming a landlord – buying your first investment property or renovating your home to rent it out during holiday periods – it’s worthwhile getting professional mortgage advice. Get in touch with a Mortgage Express broker to talk about your finance or refinance options.

References: Australian Tax Office:


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