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
- Depreciation is the most commonly missed deduction, worth $5,000 to $15,000 per year on a well-maintained property across both building structure and plant and equipment.
- Borrowing expenses like loan establishment fees, LMI, and valuation fees must be spread over five years but are often claimed only in year one or forgotten entirely.
- The fee you pay a quantity surveyor for a depreciation schedule is itself tax-deductible in the year you pay it.
- At a 37% marginal tax rate, every $1,000 in missed deductions costs you $370 in unnecessary tax.
- Small recurring costs like pest control, gardening, bank fees, and water supply charges are frequently overlooked but add up across the year.
Tax time for landlords usually goes something like this: you gather your bank statements, pull out the interest charges and council rates, hand the lot to your accountant, and hope for the best. The big deductions are obvious. But there is a surprising amount of money sitting in the less obvious ones, and many landlords leave it unclaimed year after year simply because they did not know it existed.
Here are ten deductions that Australian landlords commonly miss, and how to make sure they end up on your return where they belong.
1. Depreciation on Plant and Equipment (Division 40)
This is the single biggest deduction that landlords fail to claim. The dishwasher in your rental kitchen, the split-system air conditioner, the carpet, the blinds, the hot water system: all of these lose value over time, and the ATO lets you claim that decline as a deduction each year.
The catch is that you need to know what is in the property, when it was installed, and its effective life. For properties purchased after 9 May 2017, you can only depreciate plant and equipment assets you install yourself, not items that came with the property. But for anything you have added, such as a new oven, replacement carpet, or ceiling fans, the deductions are real and often substantial.
For a full walkthrough, see our guide on how to calculate depreciation for your rental property.
2. Capital Works Deductions (Division 43)
Division 40 covers the items inside the property. Division 43 covers the building itself: the bricks, the roof, the structural walls, fixed tiling, retaining walls, and major renovations.
If your property was built after 18 July 1985, you can claim 2.5% of the original construction cost each year for up to 40 years. On a property that cost $400,000 to build, that is a $10,000 deduction every year. Critically, the second-hand rule does not apply here. You can claim Division 43 regardless of when you bought the property.
The problem is that most landlords do not know the original construction cost. A quantity surveyor can estimate it for you, which brings us to the next item on this list.
3. Quantity Surveyor Fees
Here is the bit that surprises people: the fee you pay a quantity surveyor to prepare a depreciation schedule is itself tax-deductible. You claim it in full in the year you pay it. And the schedule that comes back typically generates thousands of dollars in annual deductions for years afterward.
A depreciation report for a standard residential property usually costs between $400 and $800. If the property was built after 1987 and you have never had one done, the return on that investment is almost always worth it. Many landlords put it off because it feels like a hassle. It is one phone call and an inspection, and it pays for itself many times over.
4. Borrowing Expenses
When you set up your investment loan, you paid establishment fees, possibly lenders mortgage insurance (LMI), valuation fees, mortgage registration costs, and title search fees. These are all deductible, but they follow a specific rule: if the total exceeds $100 (and it almost always does), you must spread the deduction evenly over five years or the term of the loan, whichever is shorter.
Many landlords claim these in year one and then forget about years two through five. Others never claim them at all. For a detailed breakdown with worked examples, read our guide to borrowing expenses on investment property.
5. Landlord Insurance
If you hold landlord insurance, building insurance, or contents insurance on your rental property, the premium is fully deductible in the year you pay it. This one seems obvious, but it gets missed more often than you would expect, particularly by landlords who pay annually and then forget to include it when gathering receipts at tax time.
Keep the renewal notice. It is the only receipt you need. For more on what landlord insurance covers and why it matters, see our landlord insurance guide.
6. Strata and Body Corporate Fees
If your investment property is in an apartment complex or townhouse development, you pay quarterly body corporate levies. These are deductible. Regular strata levies cover building maintenance, common area upkeep, and the building's insurance, and they are claimed in full in the year you pay them.
Special levies for capital improvements may need to be treated differently. Your accountant can advise on the specific levy.
7. Council Rates and Water Charges
Council rates are deductible. Most landlords remember this one. Water charges are where it gets missed: the fixed supply charges you pay are deductible, even if your tenant pays the usage component directly.
Check your water bill carefully. It usually shows both a fixed service charge and a usage charge. The fixed portion is yours to claim.
8. Pest Control and Gardening
Routine pest inspections, termite treatments, lawn mowing, garden maintenance, and tree trimming at your rental property are all deductible maintenance expenses. These tend to be smaller amounts individually, but they add up across the year, especially if your property has a garden that needs regular attention.
If you hire a gardener to maintain the property between tenancies or during a lease, keep the invoice. Many landlords pay cash for this kind of work and never think to record it. If you cannot produce a receipt, the ATO can disallow the claim. For more on what counts as deductible maintenance, see our guide on claiming maintenance and repairs on your investment property.
9. Legal Costs Related to Tenants
Legal expenses related to managing your tenancy are deductible. This includes costs for lease preparation, debt recovery against a tenant who has not paid rent, and attending a tribunal hearing over a bond dispute or lease breach.
What is not deductible: legal costs associated with buying or selling the property. Those are capital costs that feed into your capital gains tax calculation. The distinction matters, so keep your legal invoices separated by what the work was for.
10. Travel to the Property (in Limited Cases)
This one comes with a big caveat. Since 1 July 2017, the ATO has removed the travel deduction for most residential rental property investors. If you own one or two investment properties and manage them alongside your day job, you cannot claim the cost of driving or flying to inspect the property or collect rent.
The exception is narrow: if you are genuinely carrying on a business of property investment, which typically means a substantial portfolio, significant personal involvement, and business-like operations, travel may still be deductible. For the vast majority of landlords reading this, it is not. But it is worth knowing the rule exists, because if your circumstances change, your accountant can advise whether you qualify.
How Much Could You Be Missing?
The deductions on this list can add up to significant amounts. Depreciation alone can run to $5,000 to $15,000 per year on a well-maintained property. Add in borrowing expenses ($500 to $1,000 a year for five years), insurance ($1,000 to $2,500), strata fees ($2,000 to $5,000), and the smaller items like pest control and gardening, and you could be looking at thousands of dollars in unclaimed deductions.
At a marginal tax rate of 37%, every $1,000 in missed deductions costs you $370 in tax you did not need to pay. Over five or ten years of property ownership, that gap becomes substantial.
The Fix Is Better Records
Most of these deductions are not missed because they do not exist. They are missed because landlords do not have a system for tracking them. Receipts get buried in email, annual invoices are forgotten, and depreciation schedules sit in a drawer.
The landlords who claim everything they are entitled to are the ones who record expenses as they happen throughout the year, not in a scramble the week before their accountant meeting. For a complete preparation guide, see our EOFY landlord checklist.
propkt lets you log every expense against the right property, in the right category, with the receipt attached, as it happens. At tax time, you export a complete summary and hand it to your accountant. No guesswork, no missing receipts, no deductions left on the table. Get started free with your first property.