Mozo guides

What expenses can investors claim on their rental property?

A hand drops coins into a green model house. Purple background.

Congratulations! You just became a property investor thanks to a snazzy investment home loan. Besides enjoying future rental income and the glorious title of “Landlord”, there’s tax breaks to be had, too. So let’s maximise your earnings potential. Which rental expenses are tax deductible?

NOTE: Always consult a tax professional on what you can claim for tax purposes.

Rental expenses landlords CAN claim on their taxes

Collage of hands holding different shapes, representing eligible investment property tax deductions.

According to the Australian Taxation Office (ATO), there are three categories for rental expenses on your tax return. These are:

  • Deductions you can claim now, such as interest you pay on your loan, council rates, repairs and maintenance, and depreciating assets (like an air conditioner) up to $300 in value.
  • Deductions you can claim over several years, such as borrowing expenses, capital works, and the loss of value from depreciating assets. 
  • Expenses you can’t claim as a deduction, such as personal expenses, some capital fees like stamp duty, and the purchase of second-hand or used depreciating assets after 9 May 2017.

As a general rule of thumb, you should only claim expenses related to the income-producing use of the property, i.e. the cost of renting it out (as opposed to personal use, which is not tax deductible).

So long as your rental property is occupied (or genuinely available for rent*), you can claim deductions for most of your rental expenses during the tax year.

Eligible incoming-earning, tax-deductible expenses for landlords include:

  • Tenant advertising.
  • Agent fees, charges, or commissions.
  • Council rates.
  • Water charges.
  • Land tax.
  • Cleaning.
  • Gardening and lawn mowing.
  • Pest control.
  • Home insurance and landlord insurance.
  • Interest expenses on your mortgage (i.e. the interest you pay, and not the principal amount).
  • Prepaid expenses, such as an annual home insurance premium paid on 1 January. (Expenses must be under $1,000, or $1,000+ if the service period is a year or less).
  • Repairs and maintenance**.
  • Legal expenses.

Charges on the original amount of money you borrowed from your lender are known as interest expenses. So if you take out an investment home loan, you can deduct the interest charged for your mortgage repayments.

If your property is negatively geared, you might be able to claim the full amount of your rental expenses against any other income (including rent and wages) for the year.

*A property is genuinely available for rent if you can demonstrate that you’ve advertised the property openly with the broadest possible exposure and don’t have restrictive conditions in place dissuading tenants from renting your property. (So just telling your work mates doesn’t count!)

**Make sure contractors or suppliers you hire to work on the property have a valid ABN. Otherwise, you may need to withhold 47% of their payment income and send it to the ATO. If you do not withhold when you should have, you may not be able to claim the expenses on your taxes later.

Rental expenses landlords CANNOT claim on their taxes

Collage of a landlord thinking about rental expenses she can't claim as tax deductions.

No point in trying to cheat the system: the crafty ATO are on it. Not every rental expense is claimable in your taxes. This includes certain mortgage expenses and the decline in value of some assets (especially second-hand purchases).

You cannot claim the following borrowing costs for your rental property:

  • The original principal amount you borrowed on your home loan.
  • Loan balances for the property.
  • Principal repayments against the loan balance (you can only claim the interest).
  • Capital expenses** related to the purchase of the property, such as stamp duty or legal fees for solicitors/conveyancers.
  • Life insurance premiums, where the loan will be paid out by the provider in the event you die, become disabled, or lose your job (this is considered a private expense). 
  • Private borrowing expenses, such as using a portion of the loan to buy a car.

**Capital expenses are costs you incur when buying/selling a rental property. These could potentially be included in the “cost base” of the property, which could help reduce the amount of capital gains tax (CGT) you pay when you sell your property. However, you would only need to pay/claim this for your income taxes whenever you sell your property, not every year.

How to find the best investment home loan interest rates

Ultimately, the best investment home loan will depend on your budget and needs. Keeping a finger on the market pulse will give you a key advantage in your property journey.

Get started with our investor home loan comparison tool, or browse a selection of offers below.

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 473 home loans.
Last updated 21 June 2024 Important disclosures and comparison rate warning*
  • Flex Home Loan

    Investor, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.39% p.a. variable
    6.63% p.a.

    Compare
    Details
  • The Better Home Loan Special Offer

    Investment, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.19% p.a. variable
    6.19% p.a.

    Reap the benefits of a variable rate investor home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. 100% offset account available (T&Cs apply). Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

    Compare
    Details
  • 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
  • Flex Home Loan

    Fixed, Investor, Interest Only, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.49% p.a.
    fixed 2 years
    6.64% p.a.

    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.

    Compare
    Details
  • Flex Home Loan

    Fixed, Investor, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.29% p.a.
    fixed 2 years
    6.65% p.a.

    Compare
    Details
Evlin DuBose
Evlin DuBose
RG146
Senior Money Writer

Evlin, RG146 Generic Knowledge certified and a UTS Communications graduate, is a leading voice in finance news. As Mozo's go-to writer for RBA and interest rates, her work regularly features in Google's Top Stories and major publications like News.com.au.

* 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.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.