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  • Updated:7 Jan 2006

05.Deductions you can claim

The Australian Taxation Office (ATO) considers many rental expenses as allowable deductions, including:

  • Advertising for tenants.
  • Body corporate fees.
  • Council rates.
  • Cleaning.
  • Insurance.
  • Interest on loans (but not mortgage principal repayments).
  • Land tax.
  • Lease costs.
  • Property agent’s fees and commissions.
  • Quantity surveyor’s fees.
  • Repairs and maintenance.
  • Utility charges.

There are conditions with many of these deductions. For example, repair expenses you claim must relate directly to wear and tear or other damage resulting directly from renting out the property.

Capital expenses (such as the replacement of a fence or stove, improvements, renovations and extensions) aren’t deductible, though an annual depreciation amount relating to some may be. You may also be able to claim capital works deductions for some expenses if you become liable for Capital Gains Tax later.

Depreciation claims

One of the many tax deductions property investors can make is for wear and tear — on both the building and what’s inside it. However, a word of warning: according to theTax Institute of Australia, depreciation claims are a common source of dispute between the ATO and investors, and you may be asked to provide written justification for your depreciation claims.

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