What Tax Deductions Can I Claim on My Rental Property This Financial Year?

You are eligible to claim a deduction against your present year’s income for expenses pertaining to the maintenance and management of the property. It will also include interest on loans. Many people enjoy depreciation tax benefit in Australia and reduce their tax liability. When you desire financial freedom, an investment property appears to be a lucrative proposition, in particular with tax benefits. A landlord has got several ways to reduce his annual tax bill. These deductions are generally the difference between your negative cash flow and positive cash flows. Investors will be able to claim deductions on their property during tenures in which the property was tenanted or remained available for rent.

Here some crucial tax deductions that you must never overlook:

1. Interest expense:

If you sought a loan to buy a rental property, you can claim a deduction for interest charged on loan. But, the property should be tenanted or must be available for rent in the income year. Meanwhile, you will be permitted to claim interest on the loan you used for buying a depreciating asset for the rental property. It will also include any repairs you made to the rental property as a result of storm damage. Additionally, you will be able to claim the interest you have pre-paid approximately 12 months in advance.

2. Pre-paid expenses:

You can also claim a tax deduction for any pre-paid expenditure you incurred in the current year. Pre-paid expenses can be defined as expenses that provide for services covering beyond the existing income year. It may include payment of an insurance premium on January 1 that offers cover throughout the calendar year. You will be able to claim an instant deduction for prepaid expenses of less than $1000. You may claim a deduction in case expenses of $1000 or more where the service period remains 12 months or less. And, if the prepayment does not fulfill these criteria, then they may need to spread for yet another two or more years. It is important to get in touch with an expert to prepare a property depreciation schedule.

3. Repair and maintenance:

You will be eligible to claim an entire deduction for the expenses of repairs and maintenance in the year you incurred them. However, the expenditures must be directly linked to wear and tear or other destruction caused due to renting of property. Some examples of repair may include replacing broken windows, parts of fence, machinery or electrical appliances. Examples of maintenance will include repainting damaged interior walls, maintaining plumbing, etc. You need to calculate precisely tax depreciation schedule for rental property.

4. Strata fees:

If your property happens to be on strata title, you will be allowed to claim expenses of body corporate fees. However, if the fee contains maintenance and garden expenditures, you will not be able to claim these expenditures individually.


You may claim the above-mentioned expenses and bring down your tax liability. Everyone wants to enhance his/her rental home returns in Australia and leaves no stone unturned to seek claim of potential expenses. Your land tax can also be claimed as a tax deduction. If you face any confusion regarding which expenses can be claimed, you may speak to your accountant. An expert accountant will help you find out your claimable expenses.