Mozo guides

How to save money on your investment property in 2024

Enthusiastic, smiling man holding a laptop stands in front of an apartment block. There's also a range of Australian banknotes in the background.

Property investment is an increasingly popular way to achieve financial stability in 2024. But that’s not to say it won’t cost you along the way. 

Whether you’ve bought your first investment property, or you’re adding another to your portfolio, you’re likely aware of how quickly expenses add up. Thankfully, there are plenty of ways to save on your investment property costs.

Use negative gearing deductions

One of the best things about being a property investor in Australia is that our tax system will let you deduct any losses on your property against other sources of income, such as your salary, wages, or business income. 

It’s called negative gearing, and it’s quite generous. 

You might be able to claim a negative gearing deduction and reduce your taxable income if your rental property isn’t making enough to cover your property’s costs (e.g. home loan interest and maintenance costs). 

For example, say your property costs you $25,000 one year, but you only get $20,000 total rental income. 

Due to the property costing you $5,000 more than you made from it, you can offset your taxable income by that amount.

Negative gearing is mainly used when your property is vacant for an extended period, or you don’t make as much rental income to cover your costs.

Capital gains tax exemptions (when you sell)

You won’t have to worry about capital gains tax (CGT) until it comes time to sell your investment property. 

This is a tax on the difference between the amount you bought your property for and the price you eventually sell it for. In other words, it’s a tax on your capital gains.

Any properties bought and sold within 12 months will be taxed at the full CGT rate. But if you’ve held a property for at least 12 months, only 50% of the profit will be added to your taxable income.

So if a property you’ve owned for more than 12 months makes a profit of $100,000 when sold, only half of the net capital gain - $50,000 - will be subject to income tax.

Claim borrowing expenses

Borrowing expenses are the costs directly incurred when taking out a loan to purchase property. According to the Australian Taxation Office (ATO), you can claim the following borrowing expenses at tax time:

If your total borrowing expenses are $100 or less, you’ll be able to claim the full amount in the income year the expense was incurred. If they exceed $100, you can spread the deduction over five years or the term of the loan, whichever is shorter.

Claim losses from depreciation

Property investors can also claim losses incurred from depreciation as a tax deduction. You can claim depreciation on both the building and any assets within the property. 

Building depreciation 

Depreciation on your rental property is also known as capital works depreciation. It’s the wear and tear to the actual structure of your investment property and fixed items like doors, walls, the roof, and cupboards.

Assets depreciation 

The assets within your property, also known as ‘plant and equipment assets’, are eligible for depreciation deductions. This relates to the depreciation of non-permanent assets found in your property, such as ovens, refrigerators, the carpet, curtains and blinds, air-conditioners, hot water systems, and smoke alarms. 

To get an accurate assessment, you’ll need to contact a Quantity Surveyor. They can draw up a depreciation schedule, which will outline the depreciation deductions you can claim when completing your income tax return each year.

It’s a good idea to get a depreciation schedule done sooner rather than later, as the ATO will generally only let you backdate depreciation by two years.

Get a ‘numbers guy’

An accountant who specialises in property is a must for investors. They’ll keep track of any changes to laws that may affect you and your investments, help maximise your tax deductions if your property is negatively geared, and suggest ways to minimise any risks and liabilities.

Keep all of your receipts

Whenever you come into an expense, keep a record or copy of the receipt to show your accountant. Come tax time, they’ll be able to tell you what you can and can’t claim as a deduction. 

Another approach is to ask the real estate agent that manages your property to cover any expenses that come up using the rent they collect for you. They can then compile a summary of expenses on your behalf.

Refinance your investment home loan

Check your investment home loan every couple of years to ensure you’re not paying more than you need to. 

Home loan rates have increased significantly over the last couple of years, so if you’ve been getting hammered with higher repayments on your property or are simply looking for ways to save on your investment, do some rate research. 

Have a look at your current interest rate, then compare investment home loans to see if you can find a more competitive one that helps reduce your repayments. 

The average investor variable rate (P&I, $400k, <80% LVR) in the Mozo database, at the time of writing, is 7.16% p.a. However, the best rate we’ve found is over 1% p.a. lower, at 6.04% p.a. 

You can compare a few of the featured investment home loans below, or do a full database search below. 

Home loan comparisons on Mozo - last updated 17 April 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • SMSF Home Loan

    LVR <70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.99% p.a. variable
    7.00% p.a.

    Enjoy a competitive rate on your SMSF home loan with Loans.com.au. Available for refinancers only. No application fee and no settlement fee. No monthly, annual or ongoing fees. Unlimited extra repayments. Online access via Smart Money App. 30% deposit required.

    Compare
    Details
  • Back to Basics Special

    LVR<60%, Investment, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.43% p.a. variable
    6.44% p.a.

    Competitive variable for investors with no monthly account keeping or ongoing annual fees. Unlimited additional repayments & option to redraw additional repayments as cashback.

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    Details
  • Variable Investor Home Loan 80

    Investor, Principal and Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.34% p.a. variable
    6.36% p.a.

    Affordable home loan rate for buyers or refinancers.. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 30% deposit required.

    Compare
    Details
Niko Iliakis
Niko Iliakis
Money writer

Niko has three years experience as a finance journalist. He specialises in home loans, business loans and interest rate movements at Mozo.

Jack Dona
Jack Dona
RG146
Money writer

Jack is degree-qualified in communications and creative writing, with a talent for simplifying financial jargon. His approach helps consumers make better decisions. Jack is RG146 certified in generic knowledge and uses flair to make finance interesting.

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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