Tax time can feel like a scramble for property investors — rental statements, loan documents, repair invoices, and a nagging feeling you've missed something that could have saved you money. Here are the practical tips worth working through before you (or your accountant) lodge.
1. Separate repairs from improvements
This is the single most common area of confusion — and one of the easiest to get wrong.
Repairs and maintenance (fixing a broken tap, patching a fence, repainting a wall that was damaged) are generally deductible in full in the year you incur them.
Capital improvements (renovating a kitchen, adding a deck, replacing an entire roof) are not immediately deductible. Instead, they're depreciated over time or added to your cost base for capital gains tax purposes when you sell.
Keep invoices clearly described and dated, and if you're unsure which bucket something falls into, flag it for your accountant rather than guessing.
2. Don't overlook depreciation
Many investors leave money on the table simply because they don't have a depreciation schedule prepared by a qualified quantity surveyor. This covers:
Capital works deductions (the building structure itself, for properties built after the relevant cut-off dates)
Plant and equipment depreciation (carpets, blinds, appliances, hot water systems) — noting that rules around this differ depending on whether the item was already installed when you purchased the property.
A one-off schedule typically pays for itself many times over across the life of the investment.
3. Get loan interest apportionment right
Interest on your investment loan is deductible — but only to the extent the borrowing relates to the income-producing property. Common traps include:
Redraw and offset accounts: if you've redrawn funds for a private purpose (a car, a holiday, renovations on your own home), the interest on that portion is no longer fully deductible. Mixed-purpose loans need careful apportionment.
Refinancing: if you've refinanced and increased the loan, make sure the extra funds were used for investment purposes if you want to claim the full interest.
4. Keep a clean record of holding costs
Beyond interest, a wide range of ongoing costs are typically deductible against rental income, including:
Council rates, water rates, and land tax
Landlord insurance
Property management and agent fees
Body corporate/strata fees
Advertising for tenants
Pest control, gardening, and cleaning between tenancies
The key is contemporaneous records — bank statements and invoices, not memory, at tax time.
5. Understand your capital gains tax (CGT) position before you sell
If you sold (or are considering selling) an investment property, a few things materially affect your CGT outcome:
The 12-month rule: holding an asset for more than 12 months before selling generally entitles individuals to a CGT discount on the gain.
Main residence exemption interactions: if the property was ever your home — including partial-year scenarios where you've moved in and out — the calculation becomes genuinely complex, and getting it wrong can be costly in either direction.
Cost base additions: capital improvements, purchase costs (stamp duty, legal fees), and selling costs all reduce your taxable gain, but only if they're properly documented and haven't already been claimed as a deduction elsewhere.
Given how much legislative detail sits behind CGT calculations — and how often the rules are subject to change or grandfathering provisions — this is an area where a quick conversation before you sign a contract is far more valuable than one after settlement.
6. Negative gearing: know what you can (and can't) claim
If your property is negatively geared, the loss can generally offset other income — but only where the property is genuinely available for rent and expenses are properly apportioned. Watch for:
Periods where the property was used privately (by you, family, or left vacant without genuine attempts to lease it) — deductions may need to be reduced accordingly.
Loan restructures that blur investment and private purposes, as above.
7. Reconcile your rental income properly
Make sure the income you report matches what you actually received, including:
Bond money retained for damage or unpaid rent (this is assessable income when you become entitled to it, not just when it's paid to you)
Insurance payouts related to the property
Any rental income from short-stay platforms, which can have GST and other implications if your circumstances change
8. Keep an eye on the current year's rule changes
Tax settings that affect property investors — CGT discount arrangements, negative gearing settings, depreciation rules — are periodically reviewed and can shift with Federal Budget announcements. Don't assume last year's treatment automatically applies this year, particularly if you're in the middle of a scenario the rules weren't originally designed for (like a partial move-in/move-out situation).
9. Get your records in one place, early
Whether it's a shared drive, a folder of PDFs, or a spreadsheet, having the following ready before your tax return conversation saves time and reduces errors:
Rental income statements from your property manager
Loan statements (interest paid for the year)
All invoices for repairs, maintenance, and improvements
Your depreciation schedule
Purchase and (if applicable) sale contracts
The bottom line: property tax deductions are generous, but they reward good records and correct categorisation. Where there's genuine complexity — mixed-use loans, partial main residence exemptions, or a sale that touches on legislative grey areas — it's worth a proper conversation before you lodge, not after.
This article is general in nature and doesn't take into account your personal circumstances. Speak with your accountant or tax adviser about how these points apply to your situation.