Rental property tax return tips

If you own an investment property, tax time is more than just a box-ticking exercise. It's a chance to boost your financial return by making the most of the deductions available to you.

With updated legislation and shifting ATO guidelines, 2025 is the perfect time to review what you can (and can’t) claim.

What you can claim in 2025

While the fundamentals haven’t changed, knowing what’s eligible and how to categorise it is essential. Here are the major deductions property investors can typically claim:

• Loan interest: Only the interest component on your investment loan is deductible, not the principal.
• Council rates and land tax: Both state and local government charges are deductible if the property is rented or genuinely available for rent.
• Property management fees: Any fees paid to an agent for managing your rental are deductible.
• Insurance premiums: Landlord, building and contents insurance related to the rental property are eligible.
• Repairs and maintenance: Repairs that restore the property to its original condition are deductible in the same year.
• Depreciation: You can claim for wear and tear on the building structure and certain fixtures.
• Legal and professional fees: Costs for preparing lease agreements, property advice, and tax accounting services.

What’s changed in 2025?

While many categories remain consistent, 2025 has seen refinements in how deductions are applied, especially around depreciation and compliance reporting:

• Stricter documentation requirements mean you’ll need accurate receipts and detailed schedules for claims.
• Phase-out of older building allowances affects deductions for properties built before specific cut-off dates.
• Expanded digital audit trails from the ATO are making real-time reporting more transparent.

Staying across these changes ensures your claims are both maximised and compliant.

Repairs vs capital improvements

One of the most common points of confusion is knowing the difference between repairs and capital improvements:

• Repairs restore something to its original condition - think patching a wall or replacing a broken lock.
• Capital improvements enhance the property beyond its original state - like installing a new kitchen or building a deck.

Only repairs are fully deductible in the year they’re done. Improvements must be depreciated over time.

Why depreciation schedules are worth it

If your property was built after 1987 or contains eligible assets, a depreciation schedule from a qualified quantity surveyor can help you maximise deductions:

• Capital works deductions (e.g. bricks, concrete, roofing)
• Plant and equipment deductions (e.g. carpets, appliances, air-conditioning units)

A depreciation schedule outlines the value of both structural elements and removable assets over time, allowing you to claim deductions annually without the guesswork. This becomes especially valuable for newly built properties, renovated homes, or those with high-value fittings and fixtures.

Even if your property isn’t brand new, you could still be eligible to claim depreciation, especially on renovations carried out by previous owners. The key is to engage a qualified quantity surveyor who can prepare a compliant, ATO-recognised schedule.

These schedules cost money upfront but typically pay off through higher yearly deductions and long-term tax savings. For most investors, it’s a small investment that delivers consistent financial returns year after year.

Common mistakes to avoid

• Claiming improvements as repairs
• Forgetting borrowing costs like loan setup fees
• Not keeping receipts or detailed records
• Overlooking partial-year claims if you bought or sold mid-financial year

Staying organised throughout the year makes tax time much less stressful.

Our best tips to get ready for tax time

Getting prepared ahead of time can make the tax process faster, easier, and more accurate. Start by:

• Gathering all receipts and invoices for expenses throughout the year
• Organising records by category (repairs, insurance, interest, etc.)
• Reviewing your income and expense summary from your property manager
• Checking your depreciation schedule is up to date
• Noting any changes to tenancy, ownership, or major works that happened during the year

Compiling this information before handing it over to your accountant saves time, reduces the chance of missing deductions, and helps ensure your return is lodged correctly. The more organised you are, the more your accountant can focus on maximising your return rather than chasing up documents.

How a property manager helps

Professional property managers go beyond collecting rent. They become your year-round support system, helping you:

• Track and categorise deductible expenses as they occur
• Maintain well-organised records for smooth end-of-financial-year processing
• Monitor and report on capital works and maintenance that may affect your deductions
• Coordinate invoices and receipts from trades and service providers
• Provide monthly and annual income and expense summaries to streamline your tax preparation
• Liaise with your accountant or tax advisor to ensure accurate and complete documentation

They also stay on top of changes to property legislation and tax rules, keeping you informed and compliant. For many investors, the guidance and admin support of a property manager pays for itself in time saved, errors avoided, and returns maximised.

When to seek expert advice

While it’s possible to lodge your return yourself, working with a tax advisor or accountant who specialises in property investment ensures you stay compliant and fully informed.

Proactive tax planning - especially if you’re buying, selling, or renovating in the near future - can save you thousands.

Tax time checklist for landlords

Here’s a quick list to discuss with your accountant:

• Rental income statements
• Interest on loans
• Council and strata rates
• Repairs vs improvements
• Insurance premiums
• Depreciation schedule
• Property management fees
• Legal and accounting fees
• Travel (if applicable)

Need help managing your investment?

If managing your property is becoming more complex than you’d like, now’s a great time to reach out.

Whether you’re a first-time investor or building your portfolio, the experienced property management team at Page&Co can help you stay compliant, maximise your deductions, and make tax time simple.

The information provided in this blog is for general informational purposes only and does not constitute financial, investment, legal, or professional advice. While we strive to ensure accuracy, we make no guarantees of any kind regarding the completeness or reliability of the information.You should always do your own research and seek independent advice from a licensed financial or property professional before making any investment decisions.