Rental Property Tax Deductions Most Landlords Miss
A Practical guide for Australian Property Investors
Owning an investment property can be a powerful way to build long-term wealth — but many landlords unknowingly miss out on legitimate tax deductions, leaving money on the table each year.
At Galley Associates, we regularly see rental property owners overpay tax simply because they are unaware of what can (and cannot) be claimed under ATO rules.
Here are some of the most commonly missed rental property tax deductions every landlord should know.
1. Interest on Your Investment Loan
Interest on loans used to purchase, renovate, or maintain your rental property is generally deductible.
This includes:
Interest on your main investment loan
Interest on redraws or top-ups (if used for rental purposes)
⚠️ Common mistake:
Claiming interest on personal portions of a mixed-purpose loan. The ATO closely reviews this.
2. Property Management Fees & Advertising Costs
If you use a real estate agent, many related costs are deductible, including:
Property management fees
Advertising for tenants
Lease renewal and letting fees
These are often overlooked when landlords rely solely on annual agent statements.
3. Repairs vs Improvements (A Common Trap)
Repairs that fix wear and tear are usually deductible, such as:
Fixing leaks
Replacing broken fittings
Repairing damaged walls or floors
However, capital improvements (like renovations or upgrades) must be depreciated over time.
👉 Getting this classification wrong is one of the most common ATO audit triggers.
4. Depreciation (Often Missed Entirely)
Many landlords fail to claim depreciation, especially on older properties.
You may be able to claim depreciation on:
Fixtures and fittings
Capital works (building write-off)
A quantity surveyor’s depreciation report is often required — and can significantly reduce your taxable income.
5. Travel & Inspection Costs (Restricted but Not Gone)
Travel deductions for inspecting rental properties are restricted for individuals, but companies, trusts, and SMSFs may still be eligible in certain cases.
This is an area where structure matters — and where advice is critical.
6. Council Rates, Insurance & Utilities
You can generally claim:
Council and water rates
Body Corporate fees
Landlord insurance
Utilities paid by you (if not reimbursed by tenants)
These are often missed when expenses are spread across multiple accounts.
7. Professional Fees
Fees paid to professionals are deductible, including:
Accounting and tax agent fees
Property tax advice
Bookkeeping services related to your rental property
These deductions are often forgotten or only partially claimed.
8. Capital Gains Tax (CGT) Planning Before You Sell
Many landlords only think about tax after selling, which is often too late.
Proper CGT planning can include:
Timing the sale
Using carried-forward losses
Structuring ownership correctly
Early advice can make a significant difference to your final tax outcome.
ATO Audit Focus: Rental Properties
A 2026 rental property guide emphasises stricter ATO scrutiny of holiday homes (deductions available only for genuine income-producing use) and the importance of meticulous record-keeping for tax deductions, alongside strategic upgrades to attract and retain tenants. The ATO has increased audit activity around:
Rental income not fully declared
Incorrect repair claims
Private expenses claimed as deductions
Inadequate record-keeping
Keeping accurate records and seeking advice early reduces audit risk.
How a Rental Property Accountant Can Help
A specialist rental property accountant can:
Review your deductions thoroughly
Ensure ATO compliance
Identify missed opportunities
Help with depreciation and CGT planning
Structure your investments tax-effectively
At Galley Associates, we work with landlords and property investors across Clayton, Melbourne, and Australia to help them maximise deductions while staying compliant.
Need Help with Your Rental Property Tax?
If you own an investment property and want to ensure you’re claiming everything you’re entitled to — without risking ATO issues — we’re here to help.