Tax is a big part of investment property returns, and the rules are detailed. This is a general guide to common deductions, not tax advice. Your accountant should confirm what applies to you, and the ATO's rental properties guide is the official reference.
Deductions you can usually claim in the year
- Interest on loans used to buy or improve the rental property
- Property management fees and letting fees
- Council rates and water charges (if you pay them)
- Land tax
- Strata levies (for ordinary maintenance and admin funds)
- Landlord and building insurance
- Repairs and maintenance that restore something to its original condition
- Advertising for tenants
- Pest control, gardening and cleaning
- Accounting fees for the rental
Deductions claimed over time
Borrowing costs
Loan establishment fees, LMI, valuation fees and mortgage registration fees for an investment loan are generally deductible over five years, or the loan term if shorter.
Capital works (building depreciation)
For residential buildings built after 15 September 1987, you can generally claim 2.5% of the construction cost each year for 40 years.
Plant and equipment (depreciating assets)
Items like ovens, carpets, blinds and hot water systems depreciate over their effective life. But: if you bought an established residential property after 9 May 2017, you generally can't claim depreciation on second-hand plant and equipment already in the property. New items you install can still be depreciated.
A quantity surveyor's depreciation schedule helps you claim correctly.
Common mistakes
Claiming improvements as repairs
Replacing a broken tap with a similar tap is a repair. Renovating the whole bathroom is an improvement, claimed through capital works over time.
Initial repairs
Fixing defects that existed when you bought the property is usually capital, not a deductible repair.
Travel to inspect the property
Since 1 July 2017, travel costs to inspect or maintain a residential rental property are generally not deductible for individual investors.
Mixing personal and investment borrowing
If you redraw from an investment loan for personal use, that portion's interest isn't deductible. Keep loans separate.
Claiming when the property isn't genuinely available for rent
Holiday homes that are mostly used by you, or advertised at above-market rent, can limit deductions. Apportion carefully.
How the 2027 changes affect deductions
From 1 July 2027, negative gearing is limited to new builds for properties bought after 12 May 2026. Expenses are still relevant, but for affected established properties, rental losses generally won't offset your other income in the same way. Properties held before the cut-off are grandfathered.
How lenders use your tax figures
Lenders look at your tax returns to assess income. Some add back depreciation and interest when assessing rental income, since they're non-cash or will be replaced by the new loan. That's one reason lender choice matters for investors.
Frequently asked questions
Can I claim interest on my home loan if I work from home?
Generally not for an owner-occupied home, except in limited circumstances. Ask your accountant.
Is LMI on an investment loan deductible?
Generally yes, over five years or the loan term if shorter, as a borrowing cost.
Do I need a depreciation schedule?
It's not required, but it often pays for itself, especially for newer properties.
Want your investment loans structured to keep deductions clean? Call Finfident on 0424 545 654. We work alongside your accountant.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.