Rental property tax deductions. What you can and cannot claim.

What you can’t claim

Expenses you cannot claim include:

• Those relating to your personal use of the rental property
• Utility bills paid by the tenant
• Borrowing costs where you have borrowed against the equity in the investment property for private use
• Costs relating to the purchase or sale of the investment property.

But remember, many of the costs relating to the purchase or sale of the investment property can be included in the cost base. For this reason, it is especially important that you keep detailed records of your spending from the beginning of your investment journey.

Ensure you identify all eligible costs to be included in the cost base as it may both reduce any capital gain or increase any capital loss which can be carried forward indefinitely to apply to future capital gains.

What you can claim

You can claim a wide range of running and management expenses against your investment property’s income, including:

• Real estate management fees
• Council and water rates
• Advertising for tenants
• Insurance
• Interest on your investment loan
• Reasonable travel expenses to inspect your property
• Depreciation on assets like whitegoods and air conditioners.