Residential Investment Properties – What You Can and Can’t Claim

In our last note, we had a quick review of how changes to the 2017-18 Budget might affect residential investment property owners and their Income Tax position.  While there was some bad news from the point of view of travel claims, and claiming depreciation on plant and material (at least in your Income Tax*), there are still plenty of things you CAN claim against managing your investment property.

In this blog, I’ll give you a brief reminder, and while Porters CA have all these checks in mind when preparing your Income Tax return, we rely on YOU to keep accurate records and receipts, so it’s worth knowing what to look out for.

What you CAN claim in your Income Tax against your Rental Investment Property

  • Advertising for tenants
  • Bank charges
  • Body corporate fees/strata levies
  • Borrowing costs (including mortgage insurance) in relation to investment property loans (deductible over 5 years)
  • Cleaning costs
  • Council and water rates
  • Depreciation, including certain capital works (Note: Only if you owned the property prior to 10 May 2017)
  • Electricity and gas
  • Gardening
  • Insurance
  • Land tax
  • Letting fees
  • Pest control services
  • Property agent’s fees and commission
  • Quantity surveyors’ fees
  • Secretarial, bookkeeping fees and tax related expenses
  • Security patrol fees
  • Repairs and maintenance costs
  • Stationery and postage costs
  • Interest expense on the loan borrowed to finance the property purchase


What you CAN’T claim in your Income Tax against your Rental Investment Property

  • Travel expenses to your residential investment property to inspect, maintain or collect rental income (as of 1 July 2017)
  • Expenses of a capital or private nature;
  • Body corporate fees to be allocated to a special purpose “sinking” fund;
  • Expenses not actually incurred by the taxpayer such as water consumption and electricity paid by the tenants.


Other Things

  • Receipts, receipts and more receipts – without them, we cannot substantiate any deductions, so keep an accurate record and storage or filing system.
  • The property must be rented or genuinely available for rent in order to claim deductions.
  • If the property has not been available for rent during the year, deductions need to be apportioned.
  • Lastly, a reminder that any investment property purchased after 9 May 2017 can only have depreciation claimed on outlays actually incurred by the investor, and remember, this depreciation cannot be claimed in your Income Tax, but now forms part of the cost base of your asset – realised if and when you sell in your CGT.


What does it mean for you?


If you are receiving this email from Porters CA, we have you registered for tax purposes as an owner of a residential rental property, so we’ll take care of the fine print and make sure your income tax return is in line with the new and existing tax laws.

Practically Speaking

For owners of Residential Property Investments, we rely on the information you provide us, so accurate record keeping and full disclosure is essential.


If you would like more information or to talk about your situation, please get in touch with us at the office on (08) 6436 0900.


*on assets purchased after 10 May 2017
Please note: The information presented in this column is general in nature.  If you are intending to apply it to your personal situation, you should seek professional advice to validate your interpretation is correctly applied to your financial affairs
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