This article is general information only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your situation.
Key takeaways
- Your accountant needs a rental income summary, categorised expenses with receipts, loan interest statements, insurance invoices, and a depreciation schedule for each property.
- Only the interest portion of your mortgage is deductible, not the principal repayment.
- The ATO can disallow any deduction you cannot substantiate with a receipt or invoice, so match every expense to documentation before June 30.
- Properties built after 18 July 1985 may qualify for capital works deductions at 2.5% of the original construction cost per year, even if bought second-hand.
- Updating your property cost base records now (purchase price, stamp duty, renovation costs) saves significant effort when you eventually sell and calculate capital gains tax.
June 30 is coming. Your accountant is going to ask for your rental property records, and the difference between a smooth handover and a stressful week of digging through bank statements comes down to preparation.
This checklist covers everything you need to pull together before the end of the financial year. Work through it property by property. By the time you sit down with your accountant, or open myTax, you will have every number and document they need.
1. Reconcile Rental Income
Start with what came in. Add up every rent payment you received across the financial year, for each property separately. If a tenant paid late or you had a vacancy, those gaps matter. Your accountant needs the actual amount received, not what was owed.
Check your bank statements against your records. If you self-manage, make sure you have not missed any direct deposits. If a tenant paid cash at any point, note that too. Bond amounts are not income and should not be included here. Only actual rent received counts.
For properties with multiple tenants across the year (a tenant moved out in October and a new one started in November, say), break the income down by tenancy period. Your accountant will want to see the full picture.
2. Categorise All Expenses
Go through every expense related to each property and categorise it. The main buckets are mortgage interest, council rates, water rates, insurance, property management fees, repairs and maintenance, advertising, body corporate fees, and pest control.
The key distinction your accountant cares about is whether each expense is immediately deductible or a capital expense that needs to be depreciated over time. For a detailed breakdown of which expenses fall into each category, see our guide to landlord expenses you can claim. Replacing a broken tap is an immediate deduction. Renovating the bathroom is a capital expense. If you are unsure where something falls, flag it and let your accountant make the call. For a full rundown, see our complete guide to rental property tax deductions.
Do not forget the small recurring costs that are easy to overlook: bank fees on your rental account, postage, stationery, and the cost of any property management software you use. They add up.
3. Gather Receipts and Invoices
Every expense you plan to claim needs a receipt or invoice to back it up. The ATO can ask you to substantiate any deduction, and if you cannot produce the paperwork, they can disallow it.
Go through your categorised expenses and match each one to a receipt. Digital copies are fine. The ATO accepts scanned or photographed receipts as long as they are legible. If you are missing a receipt, check your email for order confirmations or contact the supplier for a duplicate.
Organise your receipts by property and by category. Your accountant should not have to sort through a pile of mixed documents to figure out which receipt belongs to which property.
4. Calculate Depreciation
If your property has depreciable assets, such as carpets, appliances, air conditioning units, and hot water systems, you need a depreciation schedule showing the deduction for each asset this financial year.
There are two methods: diminishing value (larger deductions in early years) and prime cost (equal deductions each year). Each asset needs a purchase date, cost, and effective life based on ATO guidelines. If you bought an established property after May 2017, remember the second-hand asset rule. You can only depreciate plant and equipment items you installed yourself, not items that came with the property.
If you do not already have a depreciation schedule, consider whether a quantity surveyor's report makes sense for your property. For a detailed walkthrough of how depreciation works, see our guide to calculating depreciation on your rental property.
Estimate Your Depreciation Deductions
Enter the details of an asset below to see the annual deduction under both methods.
Enter asset cost, purchase date and effective life to see your depreciation schedule.
5. Get Loan Interest Statements
Contact your lender or download your annual loan statement. This document shows the total interest charged across the financial year. That is the figure your accountant needs. Only the interest portion of your mortgage repayments is deductible, not the principal. If you want to see how much of your current repayment goes to interest versus principal, use the mortgage repayment calculator to break it down.
If you have an offset account, redraw facility, or split loan, the interest calculation gets more complex. Your lender's annual statement should break this down, but double-check that the interest figure relates only to the investment portion of the loan. If you have drawn on the loan for personal use at any point, the interest on that portion is not deductible.
6. Review Insurance Policies
Pull together the renewal notices or invoices for every insurance policy on each property: landlord insurance, building insurance, and contents insurance if you provide furnishings. These are all deductible in the year you pay the premium.
Check the policy period against the financial year. If a policy renewal spans two financial years (say, paid in May covering May to the following May), your accountant may need to apportion the premium. Having the actual invoice with the coverage dates makes this simple.
7. Check Property Cost Base Records
Your cost base is everything you paid to acquire and improve the property: the purchase price, stamp duty, legal fees, and the cost of any capital improvements you have made since. This does not affect your annual income tax return directly, but it matters enormously when you eventually sell and need to calculate capital gains tax. You can use the capital gains tax calculator to see how your cost base affects the tax on a future sale.
Take a few minutes to confirm your records are up to date. If you completed any renovations or capital works this financial year, such as a new deck, a kitchen renovation, or a bathroom refit, add the cost to your records now while the invoices are fresh. Trying to reconstruct these figures years later when you sell is difficult and expensive.
8. Prepare Capital Works Documentation
If your property was built after 18 July 1985, you may be entitled to claim capital works deductions under Division 43. That is 2.5% of the original construction cost each year, for up to 40 years. This applies even if you bought the property second-hand.
To claim this, you need to know the original construction cost. A quantity surveyor can estimate this if you do not have the original builder's contract. If you have already had a quantity surveyor's report done, pull it out and confirm the annual Division 43 figure. If you have done any structural renovations since the report was prepared, those may qualify as additional capital works deductions and should be added.
Package It Up
Once you have worked through each section, bundle everything by property. Your accountant needs, at minimum:
- Rental income summary for each property
- Categorised expense list with receipts
- Loan interest statement
- Insurance invoices
- Depreciation schedule (if applicable)
- Capital works deduction figure (if applicable)
The more organised this package is, the less time your accountant spends on your return, and the less they charge you for the privilege.
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