How to Claim Rental Property Tax Deductions

Owning a rental property can be brilliant for your bank account — if you know how to work the tax system. Get it right and you’ll pocket thousands in deductions. Get it wrong and you’ll cop ATO delays, audits, or worse, leave money on the table.

This is the biggest, boldest guide to rental property tax deductions in Australia, by Gotax Online Tax Experts.  No jargon, no ATO spin, just straight-up answers so you can maximise your deductions without breaking a sweat.

What are rental property tax deductions?

Rental property tax deductions are expenses you claim against your rental income. They reduce your taxable income, which lowers your tax bill or boosts your refund.

If you earn $30,000 in rent but claim $15,000 in expenses, you’re only taxed on $15,000. That’s how smart investors keep the ATO out of their pockets.

What types of rental properties qualify?

• Houses, apartments, and townhouses.

• Holiday homes (if genuinely rented out).

• Strata units or complexes.

• Even partial ownership, provided you declare your share of the income and expenses.

Can I claim mortgage interest?

Yes — but only the interest portion of repayments, not the principal. For example:

• Repayment = $2,000 per month.

• Interest = $1,200, principal = $800.

• Deduction = $1,200.

If you redraw money from your loan for personal use, that portion of interest is not deductible.

Can I claim repairs and maintenance?

Yes, but only if they bring the property back to its original condition. Examples:

• Fixing a leaking tap.

• Replacing smashed tiles.

• Repairing a broken fence.

If you rip out the old bathroom and install a luxury spa, that’s not a repair — it’s an improvement.

Repairs vs Improvements: What’s the difference?

This is where landlords trip up. Repairs = instant deduction. Improvements = drip-fed over decades.

Can I claim property management fees?

Yes. Agent fees, advertising for tenants, letting fees, and even online listing costs are all deductible. If you’re self-managing, the costs of advertising on real estate sites still count.

What about council rates and land tax?

Both are deductible in the year you pay them, provided the property is rented or genuinely available for rent.

Is insurance deductible?

Yes. You can claim:

• Landlord insurance.

• Building insurance.

• Contents insurance (if you supply furniture or appliances).

Can I claim utilities?

Only if you pay them on behalf of the tenant. If your tenant pays the bills, you can’t claim.

What travel expenses are allowed?

Travel to inspect or repair residential rental properties has been banned since 2017. Only companies and trusts can claim. Individuals cannot.

Can I claim depreciation?

Yes, if you’ve got eligible assets.

• Plant and equipment: Carpets, stoves, fridges.

• Capital works: The building itself (deducted over 40 years).

A depreciation schedule from a quantity surveyor often pays for itself in the first year.

Can I claim interest during construction?

Yes you can claim interest deductions while building on the construction part of the loan. But there's a caveat; you cannot claim any part of the interest on the loan used to fund the land content.  That interest forms part of your cost base for capital gains tax. Once it’s available for rent, that interest becomes deductible.

Are holiday homes deductible?

Yes, but only for the periods they’re genuinely available for rent. If you block out Christmas for yourself and don’t list it publicly, you can’t claim deductions for that time.

What about Airbnb and short-term rentals?

Same rules. You must apportion deductions for private vs rental use. If you rent it on weekends and live in it during the week, you can only claim the weekend portion.

Can I claim home office costs?

If you manage the property from home, yes. Stationery, phone calls, and a slice of internet costs are deductible. Using tools like GoTax’s Free Tax Software makes this simple, automatically pulling in common deduction categories.

What about borrowing costs?

Loan establishment fees, mortgage broker costs, and title search fees are deductible — usually spread over 5 years.

Can I claim legal fees?

Yes, if they relate to tenants or leases. No, if they relate to buying or selling the property (those form part of your cost base).

Do I need to apportion expenses for part-rented property?

Yes. If you rent out only a room, you must split costs. Same applies if you live in it part of the year.

Example: Rent half your house, you can only claim 50% of expenses like rates and interest.

Can I claim deductions if the property was empty?

Yes, if it was advertised at a market rate and genuinely available. If you listed it for $5,000 a week with no intention of finding tenants, the ATO will say no.

What records do I need to keep?

Receipts, invoices, bank statements, property manager reports — and keep them for 5 years. Digital copies are fine.

How do rental losses work?

If expenses exceed income, the loss offsets your other taxable income. That’s negative gearing. Example:

• Rent income: $20,000.

• Expenses: $25,000.

• Loss = $5,000.
  That $5,000 reduces your overall taxable income.

Case Study: John vs Sarah

• John: Spent $5,000 fixing a broken roof. Claimed it immediately.

• Sarah: Spent $25,000 upgrading her kitchen. Can only claim it over 40 years as capital works.

Result? John gets a full $5,000 deduction this year. Sarah only gets ~$625 this year.

Deductible vs Non-Deductible

Do rental property owners wait longer for refunds?

Sometimes, yes. Rental schedules are complex and the ATO double-checks them carefully. Missed expenses, shared ownership, or dodgy apportioning can trigger a review.

That’s why GoTax’s Rental Property Return is designed to keep everything neat and correct, so your refund isn’t stuck in limbo.

Can self-employed landlords claim differently?

Yes. If you’re running your rental alongside an ABN income, things can get messy. Using GoTax’s Self-Employed Tax Return keeps your rental claims balanced with your business income — no crossed wires with the ATO.

How do I avoid refund delays as a landlord?

Accuracy is king. The easiest way to avoid ATO bottlenecks?

• Wait for prefill in July.

• Record everything properly.

• Claim the right things, not “creative” deductions.

• Use GoTax’s Quick Tax Return option if your return is simple and you want your refund ASAP.

Where can I learn more about deductions?

You don’t need to wade through ATO technical papers — GoTax has plain-English guides across all tax types. Check out our More Great Blogs for simple tips on contractors, freelancers, rideshare drivers, and more.

Gotax says

Rental properties can be a deduction goldmine — but only if you know the rules. With GoTax, you’ll claim every cent you’re entitled to and keep the ATO off your back. Whether it’s interest, repairs, depreciation, or negative gearing, we’ve got it sorted.

Call to Action

Maximise your refund today. Start your Rental Property Tax Return with GoTax Online Tax experts at https://www.gotax.com.au/rental-property-tax-return.

Signup to GoTax and not only get your Tax return done, you can also ask as many questions as you like and get informed answers. You have access to the equivalent of a Tax Einstein — that is our very own D.e.r.e.k as well as the best credentialed Tax Accountants around.  Gotax Online tax experts.