TL;DR – What You Need to Know

- You can only claim expenses when the property is rented or genuinely available for rent.
- Keep good records — especially for interest, repairs vs capital improvements, and depreciation.
- The 2026 Federal Budget introduced major changes to negative gearing and Capital Gains Tax from 2027 onwards.
- New properties and properties you already own have different rules — timing now matters more than before.
- Use our spreadsheet (or invite us to your software) so we have clean numbers to work with.

Being a landlord means you've got a tax return that's more involved than most. You've got income to declare, deductions to claim, depreciation to track, and now — thanks to the 2026 Federal Budget — some significant changes on the horizon that will affect how your investment is taxed.

Let's go through all of it.

First — what counts as a rental property?

In the ATO's eyes, you're a landlord if:

You rent out a property or part of a property
You list a room or your whole home on Airbnb — even just while you're on holiday
You have a granny flat that you rent out

The ATO's data matching is thorough. Airbnb and other platforms report to the ATO, so income that isn't declared tends to get noticed.

What can I claim each year?

To claim expenses, your property needs to be rented or genuinely available for rent. If it's sitting empty and not advertised, you can't claim the costs.

Expenses you can claim include:

Advertising for tenants
Bank charges related to the property
Body corporate and strata fees
Cleaning
Council and water rates
Insurance
Interest on your loan (more on this below)
Land tax
Pest control
Gardening and lawn mowing
Property management or agent fees
Software for tracking income and expenses
Depreciation (see below)
Repairs and maintenance (see the repairs section below)

A note on loan interest: You can only claim the interest on borrowings that were used to purchase or maintain the rental property. If you've refinanced and used some of that money for personal purposes, that portion of the interest is not deductible. The ATO is watching this area closely.

What is Depreciation?

Anything you purchase for the property that costs more than $300, or that is a fixture, can't be claimed as an immediate deduction. Instead, it gets depreciated — claimed over its useful life.

Depreciation falls into two buckets:

• Plant and equipment — things you can physically remove from the property, like air conditioners, carpet, blinds, hot water systems
• Capital allowances — the building itself

To claim all of your depreciation entitlements properly, you need a Tax Depreciation Schedule prepared by a qualified quantity surveyor. Think of it as a document that unlocks years of deductions.

Repairs vs Capital Improvements — what's the difference?

This one catches people out regularly.

Regular maintenance and repairs — fixing a broken tap, repairing guttering after a storm, oiling a deck — these are deductible in the year you pay for them.

Capital improvements — a new kitchen, new fence, new bathroom, extensions — these are not immediate deductions. They get added to your cost base (relevant when you sell) or claimed as depreciation over time.

Pre-purchase repairs — if you buy a property and spend money getting it ready for tenants before anyone moves in, those costs can't be claimed immediately either. They get added to your purchase costs and claimed when you eventually sell.

The distinction matters. If you're not sure which category something falls into, ask us before you assume.

I've just purchased a property — what can I claim?

The purchase costs themselves aren't immediately deductible. The purchase price, stamp duty, legal fees and building and pest inspection costs all get bundled up and form your cost base — the figure used to calculate your capital gain when you eventually sell.

The exception is loan establishment costs, which can be claimed over five years.

I've just sold a property — what happens?

When you sell, Capital Gains Tax (CGT) applies. The capital gain is the difference between what you sold for and your cost base (purchase price plus all acquisition and disposal costs).

A few important things:

• The contract date is the date of sale for tax purposes — not settlement
• If you've held the property for more than 12 months, you may be entitled to the CGT discount (see the Budget 2026 section below for changes to this)
• Keep all your records — settlement statements, receipts for renovations, loan documents, depreciation schedules. All of it feeds into the calculation

Holiday homes and partially personal-use properties

The ATO has been actively reviewing holiday homes for several years now, and continues to. The rule is simple: you can only claim expenses for the periods the property was genuinely available for rent or actually rented.

If you use the property yourself some of the time, your expenses need to be apportioned. And if the property is listed for rent at above-market rates during popular periods in a way that effectively prevents it from being rented, the ATO may treat the whole exercise as personal use. Document everything.

Budget 2026 Changes – What Property Investors Need to Know

The 2026 Federal Budget introduced significant changes to negative gearing and Capital Gains Tax that will affect most property investors from 2027 onwards.

Key points:

- Properties you already own are largely grandfathered.
- New builds remain fully negatively geared.
- Established properties bought after Budget night will face restrictions on offsetting rental losses against salary from mid-2027.
- The 50% CGT discount is being replaced by an indexation method from 1 July 2027 (with some flexibility for new residential property).

These changes make the timing of buying and selling investment properties much more important. We’ve written a detailed guide on exactly how the changes work and what they mean in practice.

Read more: Federal Budget 2026: What Property Investors Need to Know

What records do I need to send you?

Depends on how you manage the property:

If you use a real estate agent: we need the annual statement from them showing income and expense breakdown, plus anything you've paid personally (like loan interest).

If you manage it yourself: we need a summary of all income and expenses. Use this spreadsheet to pull it all together.

If you use software (Xero, landlord apps): invite Growthwise as a user and we can pull the reports directly.

If you've just purchased a property: we need your settlement statement, loan documents, and any other purchase paperwork so we have your correct cost base from day one.

If you've sold a property: we need settlement statements for both the purchase and the sale, plus records of any significant capital works or renovations you've done over the years.

Ready for tax time?

Head to the Growthwise 2026 Tax Return Checklist to get started. For questions about the Budget changes or how they apply to your situation specifically, get in touch — this is one area where getting the advice right now saves money later.

Got more general questions about how we work? See our FAQ page.