Property terms explained
Plain-language definitions of property investment, tenancy, and tax terms every Australian landlord should know.
Body Corporate
The legal entity that manages a strata-titled property's common areas and shared responsibilities.
Bond
Security deposit paid by a tenant at the start of a lease, held by the state tenancy authority.
Bond Claim
A landlord's request to keep part or all of the tenant's bond for damages or unpaid rent.
Break Lease
When a tenant ends a fixed-term lease before the agreed end date.
Capital Gains Tax
Tax on the profit when you sell an investment property for more than you paid for it.
Capital Works Deduction
Tax deduction for the building structure itself, claimed under Division 43 of the tax act.
Condition Report
A document recording the state of a rental property at the start and end of a lease.
Depreciation Schedule
A document listing all depreciable assets in a rental property and their annual tax deductions.
Diminishing Value Method
Depreciation method where deductions are higher in early years and decrease over the asset's life.
Division 40
ATO provision covering plant and equipment depreciation for removable or mechanical assets in rental properties.
Division 43
ATO provision covering capital works (building structure) depreciation at 2.5% per year.
Effective Life
The ATO-determined lifespan of an asset used to calculate annual depreciation deductions.
Electrical Safety Switch
A safety device (RCD) required in rental properties that cuts power if it detects a current leak to prevent electrocution.
EOFY
End of financial year (June 30 in Australia), when the tax year closes and deductions are finalised.
Equity
The difference between your property's current market value and the amount you owe on it.
Land Tax
An annual state government tax on the value of land you own, excluding your principal place of residence.
Lease Agreement
The legal contract between a landlord and tenant that sets out the terms of a residential tenancy.
Loan-to-Value Ratio
The mortgage amount as a percentage of the property value, commonly known as LVR.
Negative Equity
When you owe more on your mortgage than the property is currently worth.
Negative Gearing
When the costs of owning a rental property exceed the rental income it generates, creating a tax-deductible loss.
Net Yield
Rental yield calculated after all property expenses are deducted.
Notice to Vacate
Formal written notice requiring a tenant to leave the rental property by a specified date.
Periodic Tenancy
A lease that continues on a rolling basis with no fixed end date, typically month-to-month.
Pool Fencing
Legal requirement for barriers around swimming pools on rental properties to prevent drowning.
Positive Gearing
When rental income exceeds all property costs, generating a net profit.
Prime Cost Method
Depreciation method with equal deductions each year over the asset's effective life.
Principal and Interest
A loan where repayments cover both the interest charged and a portion of the borrowed amount.
Settlement Date
The date when property ownership officially transfers from the seller to the buyer.
Smoke Alarm Compliance
Legal requirement to install and maintain working smoke alarms in rental properties.
Strata Levies
Fees paid by unit and apartment owners to maintain shared areas and cover body corporate costs.
Subletting
When a tenant rents out part or all of the rental property to another person.