THE THINGS YOU CAN CLAIM STRAIGHT AWAY
Expenses for which you may be entitled to an immediate deduction in the income year you incur the expense:
- Advertising for tenants
- Bank charges
- Body corporate fees and charges*
- Cleaning
- Council rates
- Electricity and gas (while rented or available for rent)
- Gardening and lawn mowing
- Insurance – building, contents, landlord
- Interest on loans
- Land taxes
- Lease document expenses
- Legal expenses (tenant-related)
- Mortgage discharge expenses
- Pest control
- Property agent’s fees and commissions (including prior to the property being available to rent)
- Quantity surveyor’s fees
- Repairs and maintenance
- Secretarial and bookkeeping fees
- Security patrol fees
- Stationery and postage
- Telephone calls and rental
- Tax agent fees
- Water charges.
You can claim expenditure such as interest on loans, local council, water and sewerage rates, land taxes, and emergency services levy you incurred during renovations to a property you intend to rent out. However, you cannot claim deductions from the time your intention changes, for example, if you decide to use the property for private purposes.
THE THINGS YOU CAN CLAIM OVER A NUMBER OF YEARS
There are three types of expenses you may incur for your rental property that may be claimed over several years:
- Borrowing expenses
- Amounts for the decline in value of depreciating assets (allowed only in certain circumstances)
- Capital works deductions.
THE THINGS YOU CAN’T CLAIM
Expenses for which you are not able to claim deductions include:
- Acquisition and disposal costs of the property
- Expenses not actually incurred by you, such as water or electricity usage charges borne by your tenants
- Expenses associated with periods where your property (including your holiday home) was not genuinely available for rent
- Expenses that are not related to the rental of a property, such as:
- Expenses connected to your own use of a holiday home that you rent out for part of the year, or
- Costs of maintaining a non-income producing property used as collateral for the investment loan
- Expenses related to holding vacant land.
Other expenses for which you are not able to claim deductions include:
- Travel expenses to inspect a property before you buy it
- Expenses incurred in relocating assets between rental properties prior to renting
- Expenses for rental seminars about helping you find a rental property to invest in.
Vacant Land – From 1 July 2019, you can no longer claim tax deductions for the cost of holding vacant land. The Australian Taxation Office (ATO) considers the land as vacant if:
- It does not contain a substantial and permanent structure
- It contains a substantial and permanent structure, and the structure is a residential property that was constructed or substantially renovated while the land and the premises are either
- Not yet lawfully able to be occupied
- Lawfully able to be occupied but not yet rented or made available for rent.
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