Landlord Tax Deductions Australia 2026: Maximise Your Rental Property Tax Savings
Are you missing out on thousands in rental property tax deductions? This guide covers every ATO-approved deduction for landlords in 2026, how to claim them, and the record-keeping habits that will save you $8,000+ per year—without the paperwork headache.
Keywords: rental property tax deductions, ATO landlord deductions, investment property tax 2026, landlord tax checklist, property investor tax tips
What You'll Learn
- All immediate and long-term rental property deductions for 2026
- How to avoid the most expensive landlord tax mistakes
- Real-world case studies and deduction calculations
- ATO record-keeping rules and digital best practices
- Action plan and downloadable checklist
- FAQ for common landlord tax questions
💸 The Average Landlord Problem
A 2024 ATO study found that Australian landlords under-claim an average of $8,200 per property every year. Why? They don't track deductible expenses properly, forget about depreciation, or simply don't know what they can claim. That's $8,200 in extra tax you're paying—for nothing.
💰 Rental Property Tax Deductions (Quick List)
Immediate Deductions:
- ✅ Repairs & maintenance
- ✅ Property management fees
- ✅ Council rates & insurance
- ✅ Loan interest
- ✅ Pest control & cleaning
Over Time:
- ✅ Building depreciation (2.5%/year)
- ✅ Fixtures & fittings (varies)
- ✅ Capital improvements (spread over years)
- ✅ Borrowing expenses (5 years)
Landlord Tax Deductions FAQ (2026)
Q: Can I claim travel to my rental property?
Yes, but only for managing, maintaining, or collecting rent. Travel to purchase a property is not deductible.
Q: What if my property is vacant?
You can claim deductions if the property is genuinely available for rent (advertised, set at market rates, etc.).
Q: Can I claim repairs done before renting out?
No, initial repairs before first tenants are capital improvements and must be depreciated.
Q: How long do I need to keep records?
Keep all receipts and records for 5 years after lodging your tax return.
Q: What if I lose a receipt?
Try to get a duplicate from the supplier. If not possible, use bank statements as supporting evidence and make a written note.
Quick Navigation
Immediate Deductions (Claim This Year)
These expenses get deducted in full in the year you incur them. They reduce your taxable income immediately—which means more money back at tax time.
💧 Repairs & Maintenance
The rule: You can claim repairs that keep the property in its current condition (not improvements).
✅ Examples of Deductible Repairs:
- →Fixing a broken tap or leaky pipe
- →Repainting worn walls (same color)
- →Replacing broken tiles or floorboards
- →Fixing damaged gutters or downpipes
- →Pest control & termite treatments
- →Cleaning between tenancies
❌ NOT Deductible (These Are Improvements):
- ✗Installing a new bathroom (capital improvement)
- ✗Adding a deck or pergola (capital works)
- ✗Renovating the kitchen (improvement)
Note: Capital improvements can be depreciated over time—just not claimed immediately.
💰 Loan Interest
This is usually your biggest deduction. You can claim all interest on loans used to purchase, renovate, or improve the rental property.
Example: Sarah's Loan Interest
• Loan amount: $500,000 at 6.5% interest
• Annual interest: $32,500
• Tax rate: 37%
• Tax saving: $12,025 per year
Sarah gets $12K back just from claiming her interest. Don't miss this one!
🚗 Travel & Car Expenses
You can claim travel costs for managing your rental property:
- Property inspections
- Meeting with tenants or property managers
- Supervising repairs or maintenance
- Showing the property to prospective tenants
- Collecting rent (if done in person)
Two methods: Track actual costs (fuel, servicing) OR use the cents per kilometre method (88¢/km for 2025-26, max 5,000 km).
🏢 Other Immediate Deductions
Property Management Fees
Typically 7-10% of rental income. Claim in full.
Council Rates & Water Charges
100% deductible if the property is rented all year.
Insurance
Landlord insurance, building insurance, contents insurance.
Strata/Body Corporate Fees
Full amount if the property is an apartment or townhouse.
Legal & Accounting Fees
Tax prep fees, eviction costs, lease preparation.
Advertising for Tenants
realestate.com.au, Domain listings, signage.
Ready to stop missing deductions?
Track receipts as you go, categorize expenses automatically, and export ATO-ready reports so you never miss a deduction.
Depreciation & Capital Works (The Hidden Gold Mine)
This is where most landlords leave money on the table. Depreciation can add $5,000-$15,000 per year to your deductions—but you need a depreciation schedule to claim it.
🏗️ Building Depreciation (Division 43)
For properties built after September 15, 1987, you can claim 2.5% of the construction cost per year for 40 years.
Example: Mark's New Apartment
• Purchase price: $650,000
• Construction cost (from depreciation report): $400,000
• Annual depreciation: $400,000 × 2.5% = $10,000/year
• Tax saving (37% rate): $3,700/year
Mark claims this for 40 years—that's $148,000 in total tax savings!
Since May 9, 2017, if you buy a second-hand property, you can only claim depreciation on new assets you add (not existing fixtures). Building depreciation (Division 43) still works for old properties.
🛋️ Fixtures & Fittings (Division 40)
These are items you can remove from the property. Each depreciates at different rates:
Fast Depreciation (20%/year):
- • Carpets & floor coverings
- • Curtains & blinds
- • Ceiling fans
Slower Depreciation:
- • Hot water system (10%/year)
- • Air conditioners (7%/year)
- • Dishwashers (7%/year)
💡 Pro Tip: Get a Depreciation Schedule
A quantity surveyor prepares a depreciation schedule ($400-$800) that lists every deductible item and its depreciation rate. This usually pays for itself in the first year through extra deductions.
Without a schedule, you're flying blind—and likely missing $5K+ in deductions.
New to depreciation? Read our Depreciation Calculator Guide for Division 40/43 basics and use the Depreciation Calculator to estimate your claims.
What You CANNOT Claim (Don't Make This Mistake)
These are the expenses that trip up landlords in audits:
❌ Principal Loan Repayments
You can claim interest, but NOT the principal portion of your mortgage. Only interest is deductible.
❌ Personal Expenses
If you stay at the property yourself (even for 1 night), you can't claim expenses for that period. Only claim when it's genuinely available for rent.
❌ Initial Repairs (Before Renting)
Repairs done before the property was first rented are considered capital improvements—not deductible. Example: Renovating before first tenants move in.
❌ Travel to Inspect Properties You're Buying
You can only claim travel AFTER you own the property. Looking at properties to purchase? Not deductible.
Expensive Mistakes Landlords Make
Cost: $5,000-$15,000 in missed deductions per year
Solution: Pay $400-$800 for a professional depreciation report. It pays for itself immediately.
Cost: $2,000-$4,000 in lost deductions
$50 here, $80 there—it adds up. Track EVERY expense. Use an app or spreadsheet.
Cost: Entire claim rejected in an audit
ATO requires receipts for 5 years. No receipt = no deduction. Go digital immediately.
Cost: ATO penalties + interest
Know the difference: Repairs restore (deductible). Improvements upgrade (depreciate over time).
Real Landlord Examples
Properties: 2 rental units
System: Uses ReceiptClaimer to scan every receipt, got depreciation schedules
Annual deductions:
- • Interest: $28,400
- • Property management: $5,200
- • Repairs & maintenance: $3,800
- • Depreciation: $12,600
- • Other expenses: $4,200
Total: $54,200 in deductions
Tax saved (37% rate): $20,054
Lisa spends 30 minutes per month tracking expenses. ROI: $20K for 6 hours of work.
❌ Tom: The "I'll Do It Later" Landlord
Properties: 1 rental house
System: Shoeboxes of receipts, no depreciation schedule
What he claimed:
- • Interest: $15,200 (correct)
- • Property management: $3,600 (correct)
- • Repairs: $1,400 (missing $2,800)
- • Depreciation: $0 (should be $8,500)
Claimed: $20,200
Should have claimed: $31,500
Tax lost (32.5% rate): $3,672
Tom leaves $3,672 on the table every single year. Over 10 years: $36,720 in lost savings.
Record Keeping Essentials
The ATO requires you to keep records for 5 years after lodging your return. Here's what you need:
Must-Have Records
Income: Bank statements showing rent deposits, rental ledger
Expenses: All receipts/invoices (repairs, management, rates, insurance)
Loan docs: Interest statements, loan settlement docs
Depreciation: Quantity surveyor's report
Travel: Logbook or mileage tracker (date, km, purpose)
📱 Go Digital (Seriously)
Paper receipts fade. Shoeboxes get lost. Digital is the only reliable way:
- →Snap photos immediately after every expense
- →Upload to cloud storage (Google Drive, Dropbox, or ReceiptClaimer)
- →Organize by property and year
- →Back up to multiple locations
Your Action Plan for 2025-26
Don't wait until tax time. Do this today and you'll maximize your deductions:
Get a Depreciation Schedule (This Week)
Contact a quantity surveyor. Cost: $400-$800. Return: $5K-$15K per year.
This is the single biggest ROI action you can take.
Set Up Digital Tracking (30 minutes)
Choose: Receipt app (easiest) OR folders in Google Drive/Dropbox
From now on: Every expense gets photographed and uploaded same day.
Review Last Year (1 hour)
Pull out your 2024-25 tax return. Did you claim depreciation? Interest? All repairs?
If you missed deductions, you can amend returns up to 2 years back.
Build the Habit (Daily)
Every expense: Snap → Upload → Categorize. Takes 30 seconds.
Set a phone reminder: "Did you log today's property expenses?" at 8pm daily.
Average missed deductions per landlord: $8,200/year
Tax saved if you track properly: $2,700-$3,200/year (depending on tax rate)
Wait 1 year = Lose $3,000. Wait 5 years = Lose $15,000.
The Bottom Line
- →Immediate deductions: Interest, repairs, management fees, insurance, rates
- →Depreciation: $5K-$15K/year if you get a schedule (do this!)
- →Track everything: Small expenses add up to thousands per year
- →Keep records for 5 years: Digital is the only reliable method
- →Start today: Every day you wait is money lost forever
Ready to maximize your landlord tax deductions?
As you manage your rental properties, let ReceiptClaimer handle the expense tracking. Snap receipts, categorize expenses, and generate ATO-ready reports in minutes. Never miss a deduction again!
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