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  • Writer's pictureAmanda Amey

What you can claim from your rental Property

Updated: May 19, 2023

Tax refunds are exciting for many. But are you claiming everything that you can?

Here are just a few things you can claim with your rental properties and property loans.

What can I claim?

Interest on your Mortgage :

You can claim the interest charged on the loan if you used that money to:

• Purchase a rental property

• Purchase a depreciating asset for the rental property (eg, to buy a new air conditioner for the rental property)

• Make repairs to the rental property (eg, roof repairs due to storm damage)

TIP : You can also claim the interest you have pre-paid for up to 12 months in advance.

Rates, Water & Electricity Charges:

You can claim the council rates, water charges and electricity that you pay for your rental property. But remember, if your tenant reimburses you for any water usage, this also needs to be reported as income against the rental property

What cant I claim?

You can't claim interest:

• For periods you used the property for private purposes, even if it’s for a short time

• On the portion of the loan that you use/used for private purposes when you originally took out the loan or if you refinanced

• On a loan you used to buy a new home if you don't use it to produce income, even if you use your rental property as security for the loan

• On the portion of the loan you redraw for private purposes, even if you are ahead in your repayments

• On funds used to buy vacant land, until the time construction of your rental property is complete and available for rent.

TIP : If your loan was used to buy a rental property and another purpose, such as to buy a car, you can't repay only the portion of the loan related to the personal purchase. Any repayments of the loan are apportioned across both purposes.

Remember these three steps when preparing your return:

1. Include all the income you receive

This includes income from short term rental arrangements (for example, a holiday home), water reimbursements from the tenant and other rental-related income such as insurance pay-outs.

TIP : If you get to KEEP any of the rental bond money, this must be reported as income, however, you don't need to report the initial bond as income if and whilst it is just being held as security.

2. Get your expenses right

• Eligibility – only claim expenses incurred for the period your property was rented or when you were actively and genuinely trying to rent it out.

• Timing – some expenses must be claimed over several years. It can be confusing how to claim depreciating assets vs capital works, so get in touch with us if you need any help on this. The number of years that you can depreciate the asset changes, depending on the type of asset. NOTE: Capital works is claimed over many-many more years that depreciating assets.

• Apportionment – apportion your claim where your property was rented out for only part of the year or if only part of the property was rented out. This includes if and when you used the property yourself or rented it below market rates.

TIP : You must always also apportion in line with your ownership interest

3. Keep records to prove it all

You should keep records of both income and expenses relating to your rental property, as well as purchase and sale records.

At MQ Accountants we ask you all the right questions to maximise your tax deductions, whilst still getting it right.

Get in early and book your Tax appointment here. We offer a fast and easy tax return service with minimal fuss.

This articles intention is to inform rather than advise and is based on legislation at the time. Each Taxpayer’s circumstances vary so we strongly recommend that you discuss this information with your Tax Agent, Accountant or Bas Agent before implementation. If you take, or do not take action as a result of reading this article, we accept no responsibility for any financial loss incurred. This is general advice only.


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