Property investor tax, explained and handled

Generally, eligible rental expenses are deductible in the year you incur them, to the extent they relate to earning rent. Examples include loan interest, council rates, insurance, property management fees and deductible repairs. Eligible capital works and depreciating assets are generally deducted over time. Duty on buying the property is generally not deductible and generally forms part of its CGT cost base. Travel to inspect, maintain or collect rent from a residential rental property is generally not deductible, with limited exceptions.

Repairs generally restore something to how it was, by fixing damage or deterioration that happened while the property was earning rent. They are generally deductible in the year you incur them. Improvements, and replacing an entire asset, are generally capital costs. They may be claimed over time as capital works or depreciation, or otherwise form part of the CGT cost base. Fixing damage that existed when you bought the property is generally not deductible straight away, even though it looks like a repair.

For most individual residential landlords, if you entered into the contract to buy at or after 7:30 pm (AEST) on 9 May 2017, you generally can’t claim depreciation on second-hand assets that came with the property, such as existing appliances, carpets and blinds, unless an exception applies. Eligible capital works deductions for the building may still be available, and depreciation may be available for new assets you buy for the rental, subject to private use and other limits. A quantity surveyor’s schedule can help identify eligible deductions, and we check which amounts you can claim.

Generally yes. Interest on money borrowed to buy a rental property can be claimed while the property is rented or genuinely available for rent. What counts is what the borrowed money is used for, not the property used as security. If borrowed or redrawn funds are used partly for private purposes, such as a car or a holiday, the interest must be apportioned. Refinancing doesn’t by itself change the purpose of the borrowing.

Laws passed in 2026 change negative gearing and capital gains tax from 1 July 2027. Residential negative gearing is generally restricted to qualifying new builds, and properties held at 7:30 pm (AEST) on 12 May 2026 keep the current rules. For gains accruing from 1 July 2027, the reforms generally replace the 50% CGT discount with cost base indexation and introduce a 30% minimum tax on relevant capital gains. Transitional rules and exceptions apply, so talk to us before you buy or sell.

For contracts entered into on or after 1 January 2025, Australian resident sellers of Australian real property generally need to give the buyer a valid ATO clearance certificate before settlement, whatever the property’s value. Otherwise the buyer generally withholds 15% of the purchase price and pays it to the ATO, unless an exclusion or ATO variation applies. Each registered owner needs their own certificate, so apply early.

It may. Victorian land tax can apply to investment properties, holiday homes and vacant land. It’s generally assessed on the combined taxable site value of the Victorian land you own at midnight on 31 December, for the following tax year. A qualifying home (your principal place of residence) is generally exempt. Thresholds, trust rules and absentee owner surcharges may apply. The State Revenue Office issues the assessment, and a separate vacant residential land tax may also apply.