Maximising Your Investment Property Returns: Tax Deductions for Landlords

By Flemings Property Services and Martel Wheatley

As the end of the financial year approaches, it’s crucial for landlords to understand the numerous tax deductions they can claim on their investment property.
At Flemings Property Services, we are committed to helping landlords make the most of their real estate investments. In collaboration with principal accountant Sam Martel from Martel Wheatley, we have identified key tax deductions available to landlords, allowing you to optimise your returns and minimise tax liabilities effectively.

Photographer Rachael Lenehan

Interest Expenses:

One of the most significant tax deductions for landlords is the interest paid on the property’s mortgage or any loan used to finance the investment. Landlords can claim the interest on the loan as a deduction against their rental income, lowering their taxable income and potentially reducing their overall tax bill.

Depreciation (Division 40):

Depreciation allows landlords to claim a deduction for the wear and tear of their property over time. This deduction is applicable to the assets within your investment property, such as appliances and furniture. 

Depreciation (Division 43):

Division 43, allows landlords to claim deductions for the depreciation of their property’s building structure and structural improvements. By spreading the deduction over 40 years based on the construction cost and age of the building, landlords can significantly reduce their taxable income. To accurately determine the depreciation division 40 and 43 value, it is advised to consult a qualified quantity surveyor who can provide a depreciation schedule outlining the deductions over the property’s lifespan. 

Repairs and Maintenance:

Routine repairs and maintenance expenses are generally tax-deductible for landlords. This includes costs associated with plumbing, electrical work, painting, and other upkeep required to keep the property in good condition. By keeping track of these expenses, landlords can offset their taxable income and ensure their property remains attractive to tenants. At Flemings, we provide landlords with an annual statement for each financial year, which includes a comprehensive list of maintenance expenses. Additionally, we maintain a meticulous record of all invoices received from service providers. 

Property Management Fees:

If you engage the services of a property management agency like Flemings Property Services, the associated fees are tax-deductible. Hiring professionals to handle your property’s day-to-day management not only saves you time and effort but also provides you with valuable tax benefits. 

Advertising and Marketing Costs:

Landlords can claim deductions on expenses incurred for advertising their rental property. This includes fees paid for online listings, newspaper advertisements, professional photography, and signage. Effectively marketing your property attracts quality tenants, ensuring a consistent rental income stream while reducing your tax liabilities.

Council Rates and Land Taxes:

Council rates and land taxes, such as local council rates, water charges, and land tax levies, are typically tax-deductible for investment properties. Make sure to keep records of these expenses throughout the financial year, as they can contribute significantly to lowering your overall taxable income.

Insurance Premiums:

Insurance premiums paid for landlord insurance, contents insurance and building insurance are tax-deductible. These policies protect you from various risks and unforeseen events, such as damage caused by tenants or natural disasters. By claiming these deductions, landlords can minimise their financial exposure while maintaining peace of mind.

As the financial year draws to a close, it is important for landlords to familiarise themselves with the tax deductions available on their investment properties. 

For expert guidance in making informed financial decisions and capitalising on the tax benefits available to property investors, we recommend reaching out to Martel Wheatley. Their expertise will help you navigate the complexities of property investment taxation and maximise your financial gains.

Disclaimer: This article is for informational purposes only and should not be considered as professional tax advice. For personalised guidance on tax matters, we recommend consulting a qualified tax professional.