Property Tax Deductions: Questions & Answers
Property tax deductions are one of the most common reasons people invest in property — yet they’re also one of the most confusing.
To make things clearer, here’s a simple Q&A guide that answers the most common questions about how property tax deductions actually work.
What Are Property Tax Deductions?
Property tax deductions are expenses related to owning an investment property that may be claimed against your taxable income.
If your property earns rental income, many of the costs involved in earning that income may be deductible for tax purposes.
What Type of Property Can Claim Deductions?
Tax deductions generally apply to income-producing properties.
This usually means properties that are rented out or genuinely available for rent. Your own home (your principal place of residence) is treated differently for tax purposes.
What Expenses Can Usually Be Claimed?
Common property-related expenses that may be deductible include:
- Loan interest on the investment property
- Property management and letting fees
- Council rates and water charges
- Insurance, including landlord insurance
- Repairs and maintenance
- Advertising for tenants
These expenses are generally deductible because they relate directly to earning rental income.
How Do Deductions Affect My Tax?
At tax time, deductible property expenses are offset against your rental income.
If your rental income is higher than your expenses, the property makes a taxable profit.
If your expenses are higher than your rental income, the property makes a taxable loss.
What Happens If My Property Makes a Loss?
If your property makes a loss, that loss may be offset against other income, such as your salary or business income.
This can reduce your overall taxable income and potentially lower the amount of tax you pay.
This is often where negative gearing comes into the discussion.
What Is Depreciation and How Does It Fit In?
Depreciation is a tax deduction that recognises the wear and tear of certain parts of an investment property over time.
It’s considered a non-cash deduction, meaning you may be able to claim it without paying money out during the year.
Depreciation is usually outlined in a depreciation schedule and applied by your accountant.
Do Tax Deductions Put Money Back in My Pocket?
This is a common misconception.
Tax deductions reduce your taxable income — they don’t directly give you cash.
You still need to be able to afford loan repayments and expenses throughout the year, even if the tax outcome improves.
Do Property Tax Deductions Stay the Same Every Year?
No — deductions often change over time.
Interest costs may reduce, depreciation declines as assets age, and rental income may increase.
This means your tax position can look different from year to year.
What’s the Difference Between Repairs and Improvements?
Repairs and maintenance generally involve fixing something back to its original condition and may be deductible.
Improvements usually add value or extend the life of the property and are treated differently for tax purposes.
Understanding the difference is important to avoid claiming incorrectly.
Who Should Help Me With Property Tax Deductions?
Property tax deductions must be claimed correctly and in line with current tax rules.
Tax professionals such as
The Accountants
can help ensure deductions are applied correctly and that you’re not missing out or making mistakes.
How Does My Loan Structure Affect Deductions?
While deductions are claimed at tax time, the way your loan is structured influences which expenses exist.
Interest costs, loan type, and how funds are used all affect your tax position.
This is why finance and tax advice should work together.
How Chase Helps With the Finance Side
Chase Douglas has extensive experience in mortgage lending and helps investors structure loans that support long-term strategy and tax efficiency.
Chase focuses on affordability, flexibility, and ensuring your finance setup supports — rather than complicates — your investment goals.
Still Have Questions?
Property tax deductions can be valuable, but only when they’re properly understood.
If you’re unsure how deductions apply to your situation or whether your loan structure supports your strategy, a review can provide clarity.
👉 Book a conversation with Chase Douglas to understand how your finance structure fits into your broader property and tax strategy.
Clear answers lead to better investment decisions.
