Rental Properties - Stay off the ATO's radar

Rental Properties - Stay off the ATO's Radar
By Brad Callaughan
If you own an investment property you are entitled to claim certain expenses. Below is a list of what you can and can't claim to keep you off the ATO's radar.
Capital Expenditure
You cannot claim a deduction for the costs of acquiring or disposing of your rental property.

These types of expenses below are capital in nature and go to the cost base of your property:
  • advertising to sell,
  • agent commission for selling,
  • legal fees/conveyancingon the purchase and sale,
  • stamp dutyon the purchase,
  • Capital improvements
  • travel expenses to inspect before purchase
  • expenses not actually incurred by you, such as water usage or electricity expenses,
Allowable Deductions
Accounting Fees

Bookkeeping costs, end of year fees or advise from your accountant regarding the property.

Advertising for Tenants
The cost to find tenants is deductible.

Bank Charges
Are deductible.

Body Corporate Fees/Strata Title Fees
These are to cover the shared running costs of the building such as repairs, insurance, gardening, communal lighting, etc.

Borrowing Expenses
Borrowing expenses include mortgage insurance, title search fees, registration of mortgage, stamp duty on mortgage and loan establishment fees. They are totalled and written off over 5 years.

Capital Works
Special building write off. The quantity surveyor report gives you the amount deductible.

Internal and external cleaning is tax deductible along with the cost of materials.

Given to you on the quantity surveyors report.

Small proportion of computer depreciation for related use.

Included cost of mowing lawns, yard maintenance etc.

Building and landlord insurance.   

Interest on a loan to purchase or usedfor income producing purposes.

Land Tax
Determined by OSR.

Lease Expense
Normally organised by the agent and is deductible.

Legal Expenses
Legal fees to evict a non-paying tenant.

Mortgage Discharge Fees
The costs to discharge your mortgage.

Office Supplies
Stationery &postage

Property Management 
Management fees paid to real estate agents to handle collecting the rent and paying the expenses.

Pest Control
Professional costs to make your property pest free.

Quantity Surveyor Expenses
The cost to prepare the surveyors report.

Prepaid expenses
If you prepay a rental property expense - such as insurance or interest on money borrowed

Council, water and sewerage are deductible.

Repairs that need to be made to make the property inhabitable and attractive to rent.
Repairs at the end of the tenancy will also be deductible even if they areto revert it back to a private residency, as long as done within that year.
Repairs undertaken within 12 months of the purchase will not be allowed as a deduction.

Security Expenses

Telephone Expenses

Calls made to in relation to the rental property also a proportion for internet for emailing the agent etc..

Travelling to inspect or maintain your property or collect the rent, you may be able to claim the costs of travelling as a deduction. This includes flights, car hire, meals, cabs etc only if the sole purpose of the trip was to inspect the property and was only over night. If you take the whole family and inspect the property 1 out of the 7 days you have to apportion your expenses.

He can be contacted at

Brad Callaughan is a specialist in taxation, accounting and business advisory.

He is the managing director of Callaughan Partners that was formed to deliver and exceed client’s expectations, whilst charging upfront fees. 

Brad is an avid property investor and renovator. Brad is also a strong force behind the development as well as sitting on the board of the Ross Hutchinson Foundation.


The above information is supplied by Callaughan Partners.
Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Investment Property.

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