Tax time is here, and if you’ve invested in property, now’s the time to make sure you’re claiming every deduction you’re entitled to. Understanding your allowable deductions can make a big difference to your return and your cash flow. Here are five key property tax deductions that every smart investor should be aware of.
1. Loan Interest
One of the biggest tax deductions available to property investors is the interest charged on your investment loan.
- Interest paid on your mortgage
- Interest on construction loans (even during the build)
- Interest-only repayments (if you’re using this structure)
Note: You can’t claim repayments on the loan principal, just the interest.
(Source: ATO)
2. Repairs, Maintenance and Management Costs
If you’re managing a rental property, you’ll likely have ongoing costs related to its upkeep and many of these are tax-deductible.
- Repairs and maintenance (non-structural)
- Property management fees
- Council rates and water charges
- Advertising for tenants
- Insurance (building, contents, landlord)
Note: Initial repairs to fix issues present at the time of purchase aren’t deductible, they’re considered capital works.
3. Depreciation on New Builds
This is a big one for investors who’ve built recently and one of the main advantages of building over buying established. These deductions reduce your taxable income and can significantly boost your return over time. A qualified quantity surveyor can prepare a depreciation schedule outlining your claimable items and their effective life.
- Capital works (such as the cost of construction and structural improvements)
- Depreciating assets (fixtures and fittings like appliances, carpets, hot water systems, blinds, etc.)
(Source: ATO)
4. Professional Services
If you’ve used professionals to manage or optimise your investment, you may be able to claim their services as deductions.
- Accounting and tax advice fees
- Loan application or mortgage broker fees
- Legal advice related to your investment
Even the cost of preparing your tax return may be partially deductible if it includes work related to your property.
5. Construction and Building Costs (During the Build)
If you’re building an investment property and it’s not yet rented, you may still be able to claim some holding and interest costs during construction, provided you intend to generate rental income from it. You may be able to claim:
- Loan interest during the build
- Council rates or land taxes incurred before renting
- Some pre-rental expenses related to advertising or inspections
(Source: ATO)
Always Check with a Professional
Every investment situation is unique, so we recommend working closely with an accountant or tax advisor who understands property investment.
At Emily Rose Homes, we work hand-in-hand with finance brokers and advisors who specialise in property portfolios, so if you’re looking to build and maximise your returns, we’ll help make sure you’re structured for success.
