Top 3 tax deductions you should be taking from your rental property

5 January 2021

Top 3 tax deductions you should be taking from your rental property

If you have bought an investment property, you likely know that you have gained an income stream that is going to be taxed. This is going to be added to your total taxable income, on top of your salary, other investments, and any additional income earned (such as capital gains). In saying that though, there are a few key things that you can claim deductions for. This is a list of the top three deductions you can claim immediately, relating to an investment property.

1) Property manager fees

If you have an investment property, it is likely that you are going to engage an agent for the purposes of property management. This is someone that can collect the rent for you, inspect the property periodically, find tenants, as well as advise on various real estate matters. A fee will be charged for these services, and it is entirely tax-deductible. This could include ongoing management fees, or one-off fees paid at specific times.

2) Repairs or improvements

When you get a call from your tenant and they say that the oven has broken down, it is likely that you are going to need to foot the bill for a new one. In saying that though, since it is a repair to the investment property, this can be claimed fully as a tax deduction. The same is true for anything similar, like light fittings, or taps. Likewise, if you decide to put in a new kitchen, or similar; this can also be claimed as a deduction. However, it is important to note that improvements cannot be claimed fully, immediately. Instead, they must be claimed over the course of many years; 2.5% of the cost a year, over 40 years. []

3) Property-based bills

Incurring any bills, fees, or charges based on the fact that you are the owner of the land whilst running the property as a rental, will allow you to claim those expenses as tax deductions. An example of this would be a strata (corporate body) fee, land tax, council rate, water bill, or similar. Many of these are fees that can add up quickly and cut into your investment property's profits, so you wouldn't want to have them cut into the profits further by having the amount be taxed!


The above is a list of the top 3 deductions that you should be claiming every year without fail on your investment property. In saying that, this is a general list, and specific financial advice should be sought when completing a tax return. If you would like to know more on this topic, or anything else a real estate agent could assist with, call the best in the business today, House Estate Agents, on 07 4580 0811.