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What can you claim on your rental property?

By Claire Briggs

Being an investor can be hard work. Rental properties don’t only come with a raft of maintenance issues and management troubles, they also involves a lot of accounting! Just like you might consider getting a property manager to handle the ins and outs of your lease agreements and advertising, you might want to think about an accountant top help you make the most of your portfolio.

Why claim deductibles on a rental property?

A lot of investment properties are negatively geared. What exactly does this mean? They’re run at a loss, essentially. So, to stop this from hurting your pocket while you benefit form the equity that is slowly accruing in your real estate, you can offset the loss on the property against your other taxable income, for example your salary.
This way, your tax is effectively paying off part of your property purchase. Rent makes up some too, so at the end of the day, there shouldn’t be much cost to you out of pocket – depending on the property and your individual situation, of course.

What exactly can I claim?

There is a whole raft of expenses you can deduct from your tax bill at the end of the day, which makes rental properties a very viable option for everyday investors. According to the Australian Taxation Office (ATO) there are over 230 residential rental property items that could affect your taxable income.
You can claim the cost of managing and maintaining the property and, according to the ATO, interest on loans can generally be deducted against the current year’s income. Other items that can be claimed in the same year include council rates, land tax, insurance, pest control, repairs, even travel to the property for maintenance or inspections.
There are also expenses that can be offset over a number of years, namely depreciation, capital works and borrowing expenses. The ATO notes that while interest on loans is deductible immediately, other costs associated with borrowing, such as loan establishment fees or the cost of filing documents, can be claimed over a number of income years.
If you thought home loans were complicated enough without trying to figure when you can claim what, talking to an accountant may be a good idea. In addition to someone to look after your finances, your portfolio could benefit from a mortgage adviser and a property manager.

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