A Guide to Investment Property Tax Deductions in Australia

May 16, 2023

Australian tax deductions for investment property are a great way to make money, but they can also come with hefty tax penalties. And while there’s nothing wrong with that, you need to be aware of the tax implications of your investment.

Perth business advice will create a good plan because if you’re not careful, you could end up paying more tax than you need to, or even worse, facing penalties from the ATO. Investment property tax deductions ATO guide to tax deductions for investment property in Australia.

Property owners can claim deductions for advertising expenses related to renting out their property and council rates paid on their investment property in Australia. One of the best ways to avoid tax penalties is to keep good records of all your income and expenses relating to the property. Tax deductions for an investment property include everything from the purchase price and any renovations you may have carried out to your ongoing costs like mortgage interest, insurance and council rates.

Property Investment Accountant is a specialist in Australian tax law and can help you understand your tax obligations for investment property. Perth Property Tax Experts can help you maximise your tax deductions and keep you on the right side of the law.

What Investment Property Tax Deductions Can I Claim?

investment property

When it comes to investment property tax deductions, there are a few key things that you need to keep in mind. It means that you can’t claim deductions on expenses such as your mortgage repayments or the cost of repairs and maintenance.

If you face expenses before your property is rental-ready or after your tenants have vacated, these costs would not be eligible for deductions. Keep it engaging and grammatically sound!

Now that you know the basics, let’s look at some of the specific deductions you can claim on your investment property.

1. Advertising expenses

If you incur any expenses about advertising your property for rent, such as placing ads in newspapers or online, you can claim those expenses as deductions.

2. Council rates

You can claim deductions for the council rates you pay on your investment property. The investment property is the one that is giving you profit. Investment property tax deductions aim to reduce your tax liability.

3. Insurance

If you insure your investment property against damage or theft, you can claim the cost of the premiums as a deduction.

4. Interest on loans

If you have taken out a loan to finance your investment property, you can claim deductions for the interest payments. You can also claim a deduction for any interest that you pay on any other loan.

5. Land tax

If you pay land tax on your investment property, you can claim that amount as a deduction. You can claim the tax in the year, or you can claim it as an offset against your income.

6. Legal and accounting fees

If you incur any legal or accounting fees about your investment property, you can claim those expenses as deductions.

7. Repairs and maintenance

If you incur expenses for repairs or maintenance at your investment property, you can claim those expenses as deductions. However, it’s important to note that you can only claim deductions for repairs and maintenance necessary to keep the property in a reasonable condition. You can’t claim deductions for improvements or upgrades.

8. Stationery and postage

If you incur any expenses for stationery or postage for your investment property, you can claim those expenses as deductions

What are Tax Deductions on an Investment Property?

tax deduction on investment property

When it comes to investment property tax deductions in Australia, there are a few things you need to know. Tax deductions are specific expenses related to your investment property that can be subtracted from your taxable income, thus reducing overall taxes payable. They play a significant role in maximising the financial benefits of owning an investment property.

There are two types of investment properties in Australia: residential and commercial. Residential properties are used as a home, while commercial properties are for business purposes.

You can claim deductions for the interest you pay on your loan, the depreciation of your property, and the costs of repairs and maintenance.

Keep records of all your expenses associated with your investment property. It includes receipts, bank statements, and invoices. It will help you maximise your deductions and minimise your tax bill.

You should speak to a tax agent or accountant to ensure you are maximising your deductions. They will advise you on the structure of your finances and claim deductions.​

Types of Property Investment Tax

​There are many types of property investment tax, each with its rules and regulations. Here is a guide to some of the main types of property investment tax in Australia:

Types of Property Investment Tax

1. Capital Gains Tax

Capital gains tax (CGT) is a tax on the profit you make when you sell an asset, such as a property. If you make a profit on the sale of your property, you will need to pay capital gains tax. The amount of tax you pay will depend on some factors, including how long you owned the property and the type of property.

2. Negative Gearing

Negative gearing is a strategy used by investors to minimise their tax liability. It involves borrowing money to purchase a property. The rental income from the property covers the interest on the loan and any other costs associated with owning the property. Negative gearing aims to create a situation where the rental income is less than the costs of owning the property, which results in a loss.

3. Concessional Deductions

Concessional deductions in property investment refer to specific tax deductions by the government for certain expenses related to owning and maintaining an investment property. These deductions help to reduce an investor’s taxable income and may include costs such as mortgage interest, property management fees, insurance premiums, and depreciation.

4. Non-Concessional Deductions

Non-concessional deductions can be claimed by investors regardless of how long they have owned their property. They are available for expenses, such as advertising, legal fees, and insurance.

5. Capital Allowances

Capital allowances in property investment are tax deductions on the cost of certain types of assets acquired as part of the investment. These assets include but are not limited to, plant and machinery, fixtures and fittings, and integral features within a commercial property. Capital allowances allow investors to offset the cost of these assets against their taxable income, reducing their overall tax liability.

Types of Tax Breaks on Investment Properties

​If you’re an Australian investor, there are several tax breaks that you may be eligible for when it comes to your investment property. Here’s a guide to some of the most common deductions:

  • Interest on your investment loan: You can claim a deduction for the interest you pay on your investment loan up to a limit of $100,000 per financial year.
  • Depreciation: Depreciation is a non-cash deduction that allows you to claim a portion of the cost of your investment property over its useful life.
  • Capital expenses: You can claim a deduction for certain one-off costs associated with buying or improving your investment property, such as stamp duty, legal fees and loan establishment costs.
  • Land tax: If you own an investment property in a state or territory where land tax is payable.
  • Council rates: You can claim a deduction for the number of council rates you pay on your investment property.
  • Insurance: You can claim a deduction for the cost of insuring your investment property against fire, theft and other risks.
  • Maintenance and repairs: You can claim a deduction for maintaining and repairing your investment property.
  • Rental income: You can claim a deduction for any rental income from your investment property.


​As a property investor, you must be aware of the many tax deductions available to you. By taking advantage of these deductions, you can significantly boost your investment returns and make the most out of your investment property.

By understanding these deductions, you can ensure that you are minimising your tax bill and maximising your returns.

One of the most significant tax deductions available to property investors is depreciation. Depreciation is a non-cash deduction on the wear and tear of your investment property.

To calculate depreciation, engage a Quantity Surveyor to prepare a depreciation schedule for your property.


GW Capital Group Pty Ltd General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. please seek personal advice prior to acting on this information.

By Admin

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