You can claim a deduction in the income year you incur expenses for your rental property that relate to the management and maintenance of the property, including interest on loans.
If your property is negatively geared, you may be able to deduct the full amount of rental expenses against your rental and other income – such as salary and wages and business income.
Expenses you claim this year
You can claim a deduction for these expenses only if you actually incur them and they are not paid by the tenant.
Expenses you may be entitled to claim an immediate deduction for in the income year you incur them include:
- advertising for tenants
- body corporate fees and charges
- council rates
- water charges
- land tax
- gardening and lawn mowing
- pest control
- insurance (building, contents, public liability, loss of rent)
- interest expenses
- pre-paid expenses
- property agent’s fees and commission
- repairs and maintenance
- legal expenses.
Repairs and maintenance
Repair and maintenance expenses are those costs you incur to:
- keep your property in a tenantable condition
- fix wear and tear or damage that occurs as a result of renting out your property.
To be a deductible expense, the property must either:
- continue to be rented on an ongoing basis
- remain genuinely available for rent but there is a short period where the property is unoccupied – unseasonable weather causes cancellations of bookings or advertising is unsuccessful in attracting tenants.
You can claim repair and maintenance expenses in the income year you incur them.
However, you can’t claim expenses as repairs and maintenance which are capital or of a capital nature. For example, replacement of an entire structure such as a fence or initial repairs such as defects that existed at the date you acquired the property.
For more detail on capital expenditure and improvements, see Rental expenses you claim over several years.
Watch: This video explains what you need to know before claiming a deduction for repairs and improvements to your property.