Investment Property Tax Deductions Checklist
Every major investment property tax deduction in one checklist — interest, rates, insurance, repairs vs improvements, depreciation, and what you can't claim.
Every year, landlords hand the ATO more than they owe — not through generosity, through forgetfulness. A deduction is any cost of earning your rent that you subtract from your income before tax is worked out; miss one and you pay tax on money you never really made.
Here's the full sweep: the big claims, the small ones people forget, the repairs-vs-improvements line the ATO patrols closely, and the claims that got banned.
The heavy hitters
These are the deductions that move the needle. If you claim nothing else, claim these:
- Loan interest — the interest slice of your repayments only, never the part that pays down the loan. Usually your biggest deduction by far
- Council rates and water charges
- Land tax — the yearly state tax on investment land (rules and thresholds vary by state)
- Landlord and building insurance — including cover for lost rent and tenant damage
- Property management and letting fees — everything on the agent's annual statement
- Depreciation — the paper deduction for the building and fittings wearing out, unlocked by a quantity surveyor's depreciation schedule
The small fry people forget
Individually tiny, collectively worth hundreds:
- Advertising for tenants — listings, photography, signboards
- Accounting and tax agent fees for managing the property's tax affairs
- Bank fees on the account used for the rental
- Body corporate or strata levies — the fees apartment owners pay for shared areas (the routine kind; special levies for improvements are treated differently)
- Pest control, gardening, lawn mowing and cleaning between tenants
- Smoke alarm compliance and safety inspections
- Quantity surveyor fees — the depreciation report is itself deductible
- Borrowing costs — loan application fees and lender's mortgage insurance, spread over five years or the loan term, whichever is shorter
💡Quick win
Your property manager's end-of-financial-year statement lists most of these automatically. Start there, then add the bills the agent never sees — insurance, land tax, accounting and loan costs.
Repairs vs improvements: the line with teeth
A repair puts something back to how it was — fixing a storm-flattened fence, replacing a broken window. Claim it in full, this year.
An improvement makes something better than it was — replacing a tired-but-working kitchen, upgrading a fence to a taller one. That's capital expenditure, claimed slowly over years through depreciation.
Watch the 'initial repairs' trap: fixing damage that existed when you bought isn't claimable now, however repair-shaped it looks. The ATO's view is you paid for that damage in the purchase price, so it joins your cost base — the running total of what the property cost you, which trims your capital gains tax when you sell.
⚠️The trap
Claiming a renovation as a repair is one of the most common landlord audit triggers. Back to original condition equals repair; better than original equals improvement, claimed over years. When in doubt, ask before you lodge.
The banned list
Some things simply can't be claimed, and the ATO checks these lines closely:
- Travel to inspect or maintain your residential rental — banned for individual investors since 2017
- The loan principal — paying off your own debt is not an expense
- Costs while the property isn't genuinely available for rent — your holiday house's empty months don't count
- Expenses your tenant paid — you can't claim water your tenant was billed for
- Buying and selling costs like stamp duty and agent commission — not yearly deductions, but they join your cost base and reduce capital gains tax later
Receipts or it didn't happen
Every claim has one condition: you can prove it. Keep loan statements, agent summaries, rate notices, insurance policies, repair invoices and your depreciation schedule for at least five years after lodging each return.
Keep purchase, improvement and selling records for as long as you own the property plus five years — they feed your cost base when capital gains tax comes calling.
One digital folder per property per financial year turns tax time into a half-hour job.
FAQ
Can I claim travel to visit my rental property?
Generally no — travel to inspect or maintain a residential rental has been banned for individual investors since 2017, including driving across town and flying interstate. Costs of managing the property remotely, like a property manager's fees, remain deductible.
Can I claim expenses if the property was vacant part of the year?
Yes, as long as it was genuinely available for rent — advertised at a market rate, with tenants actually being sought. Claiming a holiday house that was 'available' at triple market rent while your family used it every school holidays won't fly.
What happens if my deductions are bigger than my rent?
You've made a rental loss, and it comes off your other income — salary included — reducing your overall tax. That's negative gearing. If your income is too low to use the loss, it carries forward to future years.
Run your own numbers
Sources: figures checked against ATO published rates and thresholds for FY2025-26 at the review date. See how we check our numbers.
⚠️ General information only — not tax or financial advice. Figures relate to FY2025-26 unless stated otherwise.