Every year we talk to landlords who are leaving money on the table at tax time — not through anything dramatic, just by not claiming what they're entitled to. A rental property is a business asset, and the deductions available against it are substantial. Here is a plain-English overview of the main ones for 2026. (We're property managers, not accountants — treat this as a map, and confirm the detail with your tax adviser.)
Depreciation — the one most people under-claim
There are two kinds. Building depreciation (Division 43) lets you claim 2.5 per cent of the original construction cost each year for buildings constructed after 16 September 1987. Plant and equipment depreciation (Division 40) covers fixtures and fittings — appliances, carpets, blinds, hot-water systems — at ATO-set rates. Together, on a typical investment property, depreciation can be worth $5,000 to $15,000 a year in deductions. The catch: you generally need a quantity surveyor's depreciation schedule (usually $600–$900, itself deductible) to claim it properly. It's the single best-value piece of paperwork most landlords never obtain.
The everyday running costs
The deductions that recur every year are the bread and butter: loan interest on money borrowed to buy or improve the property (fully deductible against rental income); council rates, water and sewerage charges; landlord, building and contents insurance; and property management fees — including management, letting, advertising and lease preparation. For a professionally managed property, that last category is entirely deductible, which quietly offsets a meaningful share of the management cost.
Repairs vs improvements — the distinction that trips people up
This is where landlords most often get it wrong. A repair that restores something to its original condition — fixing a leaking tap, replacing a broken pane — is immediately deductible. An improvement that betters the property, or an 'initial repair' to fix something that was already broken when you bought it, is a capital expense, claimed over time rather than all at once. Getting the classification right is worth real money, and it's exactly the sort of thing your accountant will want documented.
One rule that catches people out
Since 1 July 2017, travel expenses to inspect, maintain or collect rent from a residential investment property are no longer deductible for individual investors. This is one more reason professional management makes sense: your property manager handles the inspections and attendance you can no longer claim to do yourself.
How good management helps at tax time
A well-run property manager doesn't just keep your property leased — they keep the records that make your tax return straightforward: itemised income and expense statements, receipts for every repair, and a clean paper trail your accountant can work from in minutes rather than hours. If your current arrangement doesn't give you that, it's worth a conversation. We're happy to show you what proper reporting looks like.
