Rental Property Tax Guide: Maximise Your 2025 Tax Deductions and Refund

Got a rental property? Good on ya! But if you want to keep more of your hard-earned rental income, you need to know what the ATO lets you claim and what they absolutely do not. Here’s your ultimate Gotax 2025 rental property tax return guide, packed with insider tips to maximise your tax deductions and get that juicy, maximum tax refund.

What Rental Expenses Can You Deduct?

The ATO has a simple rule: if you spent the money to earn rental income, chances are you can claim it. But here’s the kicker—not everything is deductible straight away. Let’s break it down.

Repairs vs Maintenance vs Capital Improvements

• Repairs: Fixing stuff damaged from renting out (like leaking taps or busted tiles). These are fully deductible in the year you pay.

• Maintenance: Think painting, cleaning gutters, oiling decks—stuff to stop things from falling apart. Deductible in full.

• Initial Repairs: Big trap alert! If you fix problems that existed when you bought the property (like broken fences), you can’t claim them straight away. These go into your cost base and help reduce your capital gains tax later.

• Capital Improvements: Upgrades like a new kitchen or roof? These aren’t instant deductions. You claim them over 40 years (yep, 2.5% a year).

Legal Fees

• Tax Deductible: Chasing rent, eviction notices, lease prep.

• Not Tax Deductible: Buying/selling property or defending your ownership. Keep these records for when you sell.

Depreciation & Capital Works

• Depreciation: Annual claims for things like carpets, appliances, and blinds—only if they were new when you bought them.

• Building Write-Offs: Claim 2.5% per year over 40 years on construction costs (for properties built after 1985).

Borrowing Costs

Setup costs for your loan (think loan fees, title searches, mortgage brokers). Claim over 5 years or the life of the loan—whichever’s shorter.

Travel Expenses (Brace Yourself)

Sorry folks—as of recent changes, travel to inspect or maintain your rental is no longer deductible (unless you’re a property company or large-scale investor).

Building Your Cost Base (For Capital Gains Tax)

Your cost base is what you paid plus extra expenses like:

• Purchase price

• Stamp duty

• Legal fees (buy/sell)

• Agent’s commission

• Renovations

• Loan setup fees

Keep your records squeaky clean for 5 years after selling. ATO doesn’t like guesswork.

Construction Costs

What's deductible if you are in a construction phase for rental properties.

Common Traps (Don’t Step In These)

• Claiming private expenses

• Deducting initial repairs upfront (naughty!)

• Claiming for periods it wasn’t genuinely rented

• Double dipping on travel

• Forgetting to apportion shared expenses

Examples to Clear the Fog

• Deductible repair: Fixing a busted lock after a tenant leaves.

• Initial repair: Mending damage present when you bought it.

• Capital improvement: Adding an ensuite to boost rent.

• Legal fee: Evicting a rent-dodging tenant.

• Borrowing cost: Loan fee of $1,200 over 5 years = claim $240/year.

10 Common Questions

Q1: Can I claim repainting? A: Yes—if it’s maintenance, not part of a reno.

Q2: Home loan redraw for holiday—claim interest? A: Nope. Only the rental-related portion.

Q3: Travel to check property? A: Not unless you’re a business or company.

Q4: Body corp fees? A: Yes—admin and sinking fund only.

Q5: Used appliances depreciation? A: No claim if installed before renting (post 9 May 2017).

Q6: Rent one room only? A: Apportion the expenses.

Q7: Legal fees to buy? A: Nope. Add to cost base.

Q8: Records needed? A: Everything—receipts, statements, contracts.

Q9: Pre-rental repairs? A: No deduction—they’re capital.

Q10: Sell the place? A: CGT applies on profits. Cost base helps reduce it.

Final Tips for Maximum Refund

• Use Gotax’s Deduction Grabber to snap receipts and apportion easily

• Claim everything you’re entitled to (but nothing dodgy)

• Keep a paper trail for every expense

• Ask the Gotax team if unsure—real humans, real help

Why Use Gotax for Your Rental Property Tax Return?

Because we get it. GoTax makes online tax returns fast, easy, and affordable. Whether you own one rental or five, our system guides you through every claim, helps maximise deductions, and gives you the maximum refund possible. No headaches, no missing receipts, no ATO drama.

Disclaimer: Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.