» ato https://www.bmtqs.com.au/bmt-insider Latest property and investor news Mon, 20 Oct 2025 22:43:26 +0000 en-US hourly 1 https://wordpress.org/?v=4.2.38 ATO reveals the biggest tax deductions for investment property owners https://www.bmtqs.com.au/bmt-insider/tax-deductions-for-investment-property/ https://www.bmtqs.com.au/bmt-insider/tax-deductions-for-investment-property/#comments Fri, 12 May 2023 05:50:55 +0000 https://www.bmtqs.com.au/bmt-insider/?p=42177 The Australian Taxation Office (ATO) releases rental property taxation statistics each year. These statistics reveal the type and size of the tax deductions that property investors claim. From the most recent ATO data, we have compiled a list of the biggest tax deductions residential property investors claimed in the 2019/20 financial year. 1 – Interest  The biggest tax deduction Australian property investors are claiming is interest on their investment loans, with $21,068,254,068 claimed in FY 2019/20. Investors can only claim interest for any period the property is genuinely available for rent and can’t claim when the property is used for private purposes or for the principal portion of the loan. 2 – Capital works depreciation Capital works deductions (Division 43) also known as building depreciation takes second place with property investors claiming $4,138,567,853 in FY 2019/20, an increase of over $153 million from the year prior. Capital works deductions are claimable for the wear and tear that occurs to a building’s structure and items considered to be permanently fixed to the property. Capital works deductions are generally claimed at a rate of 2.5 per cent per year. 3 – Council rates Council rates are calculated based on a property’s land value and can be deducted in the year they incur. $3,827,281,335 was claimed in council rates in FY2019/20. The payment of council rates covers over 100 services including the maintenance of local roads, council facilities and open public spaces such as parks and gardens. 4 – Property agent fees/commission The cost of hiring a property agent is fully tax-deductible, including the expenses associated with calling and emailing them. $3,085,509,622 was claimed in property agent fees. 5 – Body corporate fees Body corporate fees are costs incurred to maintain, manage, and control the common property on behalf of owners. Body corporate fees contribute toward the payment of things such as building insurance, maintenance of common areas and amenities, contracted on-staff, utility bills of common areas, management fees and works and repairs to the building. Body corporate fees can be immediately deducted in the year the cost is incurred, unless it is a special levy for a capital expense which must be claimed over several years under capital works. $2,869,399,392 was claimed in body corporate fees in FY2019/20. 6 – Repairs and maintenance Repairs are works made to repair damage or deterioration of a property, whereas maintenance is work completed to prevent damage or deterioration of an asset. These costs can typically be claimed as an immediate tax deduction in the year they are incurred. $2,839,134,344 was claimed in repairs and maintenance in FY2019/20. 7 – Plant and equipment depreciation $2,647,136,205 was claimed in plant and equipment depreciation (Division 40) in FY2019/20. Plant and equipment assets are items which are easily removable or mechanical in nature like hot water systems, carpets and smoke alarms for example. Investment property owners can claim depreciation for the wear and tear of these assets at a rate dependent on the investor’s elected depreciation method. Even though the legislation changes in 2017 prevented owners of second-hand residential properties from claiming deductions for previously used plant and equipment assets, this proves that there are still lucrative deductions available in this division. Owners can still claim deductions for brand-new properties and assets they installed themselves. 8 – Water charges Depending on the state, some landlords are required to pay all water supply service charges and sewerage supply service charges. While water charges are generally the responsibility of the tenant, in some states water isn’t allowed to be disconnected between tenants. In those scenarios, property owners are eligible to claim deductions for water charges during vacant periods, as long the property is genuinely available for rent. $1,793,013,752 was claimed in water charges in FY 2019/20. 9 – Insurance $1,779,337,169 was claimed in insurance fees in FY 2019/20. Property investors can claim insurance as a tax deduction, covers include landlord insurance, building insurance, contents insurance, or combined building and contents insurance. 10 – Land tax $1,529,183,161 was claimed in land tax in FY2019/20. Land tax liabilities are calculated differently in each state and are deductible in the respective income year to which the liability relates. 11 – Sundry rental expenses Sundry rental expenses are small, rare or insignificant expenses that don’t fit into other categories. $1,126,510,953 was claimed in sundry rental expenses in FY 2019/20. 12 – Cleaning expenses $306,352,293 was claimed in cleaning expenses in FY2019/20. As long as the property is genuinely available for rent, cleaning expenses are fully tax-deductible in the year they occur. 13 – Gardening/lawn mowing expenses In an apartment, unit or townhouse dwelling, it’s typically the landlord’s responsibility to maintain the lawn and any gardens as these areas are shared between tenants. Some single-dwelling leases stipulate the landlord will maintain the landscape, they may do it themselves or hire a professional service to do it. This also includes maintaining the property during vacant periods. Any equipment used exclusively for maintaining the landscape within an investment or costs associated with hiring a professional is fully tax deductible. $233,185,931 was claimed in lawn mowing and gardening expenses in FY 2019/20. 14 – Borrowing expenses Borrowing expenses include the costs involved in purchasing a property, such as loan establishment fees, lenders’ mortgage insurance, stamp duty charged on the mortgage, title search fees, costs for preparing and filing mortgage documents, mortgage broker fees and valuation fees. Borrowing expenses less than $100 can be fully deducted in the year they incur. Borrowing expenses over $100 are spread over five years or the term of the loan, whichever is less. $205,038,974 was claimed in borrowing expenses in FY 2019/20. 15 – Advertising for tenants $129,808,789 was claimed in advertising costs in FY2019/20. Advertising a rental property can be costly once photography, ‘For Lease’ signboards and online and print listings are complete. Fortunately, these expenses are fully tax deductible. In some scenarios, a real estate or property manager will include these costs in their fees. 16 – Pest control fees $77,726,097 was claimed in […]

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