A complete summary of tax deductible expenses for landlords

There are a host of investment property tax deductions you are entitled to make, which will help minimise your tax bill.

For a lot of people, the path to wealth creation or financial freedom often involves the purchase of an investment property. But there’s a lot more to it than just collecting the rent each week!

Below is a list of tax deductible expenses for landlords that will help you get the best return possible on your investment property!

Please note: you can only claim deductions on your property for the period when the dwelling was either ‘tenanted’, or ‘genuinely available for rent’.

1) Rental Advertising Costs

If you advertise for tenants through mediums such as signage, print media and online advertising, you can claim these as investment property tax deductions in the same year that you paid for them.

2) Council Rates

These are considered to be tax deductible expenses for landlords during the period when the house was actually rented during the calendar year.

3) Loan Interest

You can claim the total interest charged on your loan, and the bank fees incurred to service that loan.

4) Strata Fees

Providing your property is on a strata title, you can claim the cost of body corporate fees.

5) Land Tax

As long you have a ‘rented dwelling’ on your investment property, you can claim land tax as a deduction. Consult your tax advisor in regards to levies paid and the timing of your claim, as it varies between states.

6) Building Depreciation

Depending on when your investment property was built, you may be able to claim a deduction on the depreciation of the building’s structure and any renovations you make to the property. NB: Buildings constructed ‘post September 16th 1987’ allow you to claim a 2.5% depreciation deduction for a 40 year period. Similarly, renovations made ‘post February 27th 1992’ allow you to claim the same depreciation deduction rate.

7) Appliance Depreciation

Any appliances you supply for your tenants – such as washing machines, dryers, air conditioners and stoves – are considered to be tax deductible expenses for landlords. The depreciation is usually claimed over the asset’s ‘effective life’, which usually spans about 7 years.

8) Repairs and Maintenance

Repairs that relate directly to ‘general wear and tear’ can be claimed as investment property tax deductions – in the year that they are incurred. Examples would include hiring a tradesman to repair an appliance, or fixing a broken window after a storm. Other expenses that are aimed at improving the value of the property – such as replacing the carpets – would be treated the same as appliance depreciation.

9) Pest Control

The cost of hiring a professional pest controller can be claimed as an immediate deduction.

10) Garden and Maintenance

Any upkeep of the garden / mowing of lawns and the replacement of ‘existing plants’ can also be claimed as tax deductible expenses for landlords.

11) Insurance

You can claim the cost of insuring your rental property, as per the annual summary from your provider.

12) Bookkeeping Costs

Most investment property owners have an accountant who ‘looks after the numbers’ when it comes to their investment property. As a result, you can claim things like the cost of the advice and preparation of tax returns as investment property tax deductions.

13) Agents fees

Any property management fees paid to a real estate agent can also be claimed.

14) Legal expenses

Costs incurred for legal advice and preparing documentation relating to an investment property also classify as tax deductible expenses for landlords.

We hope this information is of assistance to all our valued clients at Ray White Fleming & Ross, and please note – it is of a general nature.

If you’d like more information, or to discuss the benefits of purchasing a rental property, please call us today on 02 6742 0566.