What You Can Claim
| Deduction | Type |
|---|---|
| Mortgage interest | Immediate — your biggest deduction |
| Property management fees | Immediate |
| Council rates and water | Immediate |
| Insurance (building and landlord) | Immediate |
| Repairs and maintenance | Immediate (if restoring, not improving) |
| Depreciation (building) | Over 40 years at 2.5% |
| Depreciation (plant and equipment) | Over effective life (carpets, appliances, etc.) |
| Travel to property (for inspections) | No longer deductible (changed 2017) |
| Advertising for tenants | Immediate |
| Body corporate / strata levies | Immediate |
| Pest control | Immediate |
| Land tax | Immediate |
Repairs vs Improvements
Repairs (replacing like with like) are immediately deductible — fixing a broken tap, replacing storm-damaged roof tiles, repainting the same colour. Improvements (making something better) must be depreciated over time — renovating a bathroom, adding a deck, upgrading the kitchen.
Depreciation Schedule
Get a tax depreciation schedule from a quantity surveyor ($400–$700). This identifies all depreciable items in your property and can add $5,000–$15,000/year in deductions for newer properties. It's a one-off cost that pays for itself many times over.
Capital Gains Tax on Sale
When you sell an investment property, you pay CGT on the profit. If you've held it for more than 12 months, you get a 50% CGT discount — only half the gain is added to your taxable income.
Frequently Asked Questions
What's the biggest deduction?
Mortgage interest — typically 60–80% of your total deductions. On a $600,000 loan at 6.5%, that's ~$39,000/year in deductible interest.
Should I get a depreciation schedule?
Yes, especially for properties less than 20 years old. A $500 quantity surveyor report typically identifies $5,000–$15,000/year in deductions. It pays for itself immediately.