The Tax Benefits of Investment Properties: What You Can (and Can’t) Claim

Property Tax Deductions: A Powerful Tool for Investors

When done right, property investing doesn’t just grow wealth through capital gains — it also provides substantial tax advantages. From loan interest to property management fees and depreciation, most out-of-pocket costs tied to owning an investment property can be claimed as deductions.

The key is knowing what you’re entitled to — and what to avoid.

What You Can Claim on an Investment Property

According to the ATO, most expenses associated with owning and managing an investment property are tax-deductible, including:

• Loan interest

• Repairs and maintenance

• Council and water rates

• Property management fees

• Insurance

• Depreciation of appliances and fixtures

• Capital works deductions (for buildings under 25 years old)

💡 Tip: Newer properties typically offer more generous depreciation benefits than older ones due to recent changes in legislation.

What is negative gearing, and how does it affect my tax?

Negative gearing occurs when the costs of owning an investment property—such as interest on the loan, maintenance, and management fees—are greater than the rental income it generates. This results in a net loss, which can usually be claimed as a tax deduction against your other income (like your salary). For many investors, this can reduce their overall tax bill and improve cash flow.

If the full loss can’t be used in one year, it may be carried forward to future years.

Are renovations tax deductible?

Yes — but with conditions.

• Repairs (e.g. fixing a roof leak) are deductible in the same year.

• Renovations or improvements (e.g. kitchen upgrades) are claimed over time as capital works deductions.

Understanding the difference is critical to claiming correctly.

Can I claim depreciation?

Yes. Depreciation allows you to claim the wear and tear on your building and its fixtures.

• New builds: Offer the most depreciation potential — often up to 40 years of claimable deductions.

• Older properties: Depreciation on the building (Capital Works) is available; how long it lasts depends on the property’s age.

Are there expenses I can’t claim?

Not everything is tax-deductible. You can’t claim:

• Stamp duty

• Travel to inspect your property

• Advertising to sell the property

• Costs related to buying (e.g. conveyancing)

Can I really save tax with property?

Absolutely — but only with the right property.

For example, a brand-new four-bedroom home may offer over $400,000 in deductions in the first 10 years, thanks to depreciation, interest, and ongoing expenses.

But not every property delivers that kind of benefit — and buying without advice can lead to disappointment.

Final Thought

Too often, investors buy a property hoping for tax savings, only to find the benefits aren’t there. The right property — matched to the right strategy — can make all the difference.

✅ Want to find a property that delivers real tax benefits?

Book your strategy call today »

Let’s look at your goals and show you what’s possible.