Blog · Property
Rental property tax: deductions you can claim and CGT when you sell
Rental properties are one of the ATO's focus areas every year. Here's what you can claim, what trips people up, and what happens when you sell.
What you can usually claim
- Interest on the loan used to buy the property (not on any part used for private purposes).
- Council rates, water charges, land tax, strata levies and insurance.
- Property management fees, advertising for tenants, and repairs and maintenance.
- Depreciation on eligible fixtures and fittings, plus capital works deductions on the building itself, typically 2.5% a year for residential buildings built after September 1987.
Where people get caught
- Repairs vs improvements: fixing what's broken is deductible now. Renovating or upgrading is capital and is claimed over time.
- Initial repairs: fixing damage that existed when you bought the place isn't immediately deductible.
- Holiday homes: you can only claim for the periods the property is genuinely available for rent at market rates.
- Redraws: using a redraw on the investment loan for personal spending muddies the interest deduction.
Selling: capital gains tax
When you sell, the gain (sale price less your cost base, including purchase costs and capital improvements) is added to your taxable income. If you're an individual or a trust and held the property for more than 12 months, the 50% CGT discount usually halves the taxable gain. Timing matters: a sale signed in June and one signed in July land in different tax years.
If the property was once your home, the main residence exemption may reduce or remove the gain.
How we help
We prepare rental schedules for Sunshine Coast investors, arrange depreciation schedules, and model the tax on a sale before you sign the contract.