Rental Property Tax Deductions in Australia: The Complete List (2026)

By Mitchell Shad  ·  28 September 2026  ·  11 min read

A rental property is one of the few investments where the costs of holding it come off your taxable income, and for most landlords those costs add up to more than the rent. But each deduction needs a record, the rules on timing are strict, and the ATO's own review found that nine in ten tax returns reporting rental income contain at least one error, even though most were prepared by a tax agent. This is the complete list, sorted the way it's claimed.

The short answer: Australian landlords can generally claim, in the year they're paid, loan interest, council rates, water, land tax, insurance, strata levies, property management fees, advertising for tenants, repairs and maintenance, pest control, gardening, cleaning and accountant's fees. Some costs are claimed over several years: borrowing costs over five years, the building at 2.5% a year, and fittings like carpets and appliances over their effective life. And some costs can't be claimed at all: travel to a residential rental property, stamp duty on the purchase, loan principal, and repairs to damage that existed when you bought it. The full list is below.

The rule behind every deduction

An expense is deductible to the extent it was incurred to earn rental income. That one sentence does most of the work:

• If the property was rented for part of the year (or genuinely available for rent for part of it), expenses are claimed for that part only.
• If you or family used it, or rented it to someone at below market rent, deductions are limited, and in the below-market case generally capped at the rent received.
• If a loan was used partly for private purposes (a redraw for a car, say), only the interest on the rental portion is deductible. The purpose of the money decides it, not which property secures the loan.
• Holiday homes are the ATO's favourite target: deductions only cover the periods the property was genuinely available to rent at market rates.

Deductions you claim in the year you pay them

Don't claim anything twice. If the property manager paid the rates or a repair out of the rent, it is already on their statement. Declaring the net rent they paid you and then claiming the same rates again is one of the errors the ATO looks for.

Most of these arrive on the property manager's annual statement. The ones that don't (loan interest, rates, land tax, insurance, strata if you pay it directly) are the ones people miss.

Repairs or improvements? The line that matters most

Repairs and maintenance are deductible straight away. A repair restores something to its original condition: fixing a leaking tap, patching a hole in plaster, replacing a few broken roof tiles, repainting a worn wall like-for-like.

Improvements are not deductible in the year you pay for them. Replacing the whole kitchen, adding a deck, or upgrading to better materials than what was there are capital works or depreciating assets, claimed over time.

Initial repairs are the trap. Fixing damage or defects that existed when you bought the property is capital, even though it looks exactly like a repair. It isn't deductible; it's added to the property's cost base, which reduces the capital gain when you sell.

Replacing an entire item (a whole hot water system, a whole fence, all the carpet) is generally not a repair either: it's a new depreciating asset or capital works, claimed over time.

Deductions you claim over several years

Borrowing costs

The costs of getting the loan, as opposed to the interest on it, are spread over five years from when the loan starts (or over the loan term if that is shorter). If the total is $100 or less, you can claim it all at once. Borrowing costs include:

• Loan establishment and application fees
• Lenders mortgage insurance (LMI)
• Mortgage registration fees and the lender's title search fees
• Stamp duty charged on the mortgage (not the stamp duty on buying the property)
• Valuation fees the lender required

If you refinance or pay the loan out early, the remaining balance is generally claimed in that year.

Capital works: the building itself

The building and structural improvements (a new deck, a renovated bathroom, a retaining wall) are claimed at 2.5% of the construction cost a year, for 40 years, for residential construction that started after 15 September 1987. You don't need to have paid for the original construction yourself: the deduction follows the building. If you don't know the construction cost of an older property, a quantity surveyor can estimate it.

Depreciating assets: fittings and appliances

Items that wear out (carpets, blinds, curtains, ovens, dishwashers, air conditioners, hot water systems) are claimed over their effective life, using the rates the ATO publishes.

• Assets costing $300 or less can generally be claimed immediately.
• Assets costing less than $1,000 can go into a low-value pool, which depreciates them faster.
• The 2017 rule: if you bought a previously lived-in residential property after 7:30pm on 9 May 2017, you generally cannot claim depreciation on the fittings that came with it. You can still claim depreciation on new assets you buy for it, and capital works on the building are unaffected. The rule doesn't apply to brand-new properties, and it doesn't apply to properties held through certain entities, such as a company.

A quantity surveyor's depreciation schedule is the document that turns all of this into a number, year by year. It usually costs a few hundred dollars, the fee is itself deductible, and for a newer property it's often the largest deduction you have.

What you can't claim

• Travel to a residential rental property to inspect it, collect rent or do maintenance: not deductible since 1 July 2017 for most individual investors.
• Stamp duty on the purchase, conveyancing on the purchase, and buyer's agent fees: capital costs, added to the cost base.
• Loan principal: only the interest is deductible.
• Initial repairs to defects that existed when you bought it.
• Improvements in the year you make them (claimed over time instead, as above).
• Expenses the tenant paid, such as water usage they're billed for.
• Holding costs of vacant land, generally not deductible since 1 July 2019 unless the land is used in a business or a building on it is available to rent.

Negative gearing, in one paragraph

If your deductions are bigger than the rent, the property makes a tax loss, and that net rental loss is generally deducted from your other income, such as your salary. That's negative gearing. It reduces your tax, but it doesn't make a loss profitable: you are still out of pocket every week, and the bet is that the capital growth outruns it. The tax saving depends on your marginal rate, so the same property costs a high earner less after tax than it costs someone on a lower income.

Records: what the ATO expects

You don't send rental records in with your return, but you need to keep them for five years from when you lodge it, and they need to show:

• Rent received, and any other income (bond kept for damage, insurance payouts for lost rent)
• Every expense, with the date, amount and what it was for
• Loan statements showing interest, and the purpose of any redraws
• The purchase contract and settlement statement (for the cost base, and to set up borrowing costs)
• The depreciation schedule
• Records of any periods the property wasn't available for rent, or was used privately

Did you buy or sell this year? Your accountant needs the contract and settlement statement. The capital gain on a sale falls in the financial year of the contract date, not settlement.

Why landlords miss deductions

Almost nobody misses the big ones. What gets missed is the small, scattered stuff that arrives on a different bill at a different time of year: the land tax assessment in January, the insurance renewal in March, a plumber paid directly rather than through the agent, the strata special levy, the quantity surveyor you meant to call. Multiply by two or three properties and the gap is real money.

The fix is to record costs against the property when they happen, not in July. That's how Compound works: every property you track carries its own rent and costs through the year, each ATO-style cost prompted as its own line, and at tax time the whole lot lands in one report per property and per entity for your accountant. It's the same data that drives the property tracker: what each property really costs you each week. It's a record of your own figures, not tax advice.

For everything else your accountant needs at the same time (shares, ETFs, crypto, trusts), see the investor tax return checklist. And for what the property's equity is actually worth to you, see net worth vs usable equity.

This is general information only, not tax advice. Rental deduction rules have detail and exceptions that depend on how the property is owned and used; check your situation with a registered tax agent. Sources: Australian Taxation Office, Rental properties guide (rental expenses, repairs and maintenance, borrowing expenses, capital works deductions, depreciating assets and the limits on previously used assets, travel expenses, and keeping rental property records); ATO guidance on vacant land holding costs; ATO media releases on rental property compliance and its random enquiry program findings.