Understanding Property Tax Deductions
Property tax deductions are one of the main reasons many Australians invest in property — but they’re also one of the most misunderstood parts of investing.
Understanding what you can (and can’t) claim helps you plan better, avoid mistakes, and make more informed investment decisions.
Here’s a clear, practical guide to understanding property tax deductions and how they fit into your overall investment strategy.
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 associated with owning and maintaining it may be deductible.
These deductions can reduce your taxable income and, in turn, reduce the amount of tax you pay.
Common Property Expenses You May Be Able to Claim
While every situation is different, common deductible expenses may include:
- Loan interest on your investment property
- Property management and letting fees
- Council rates and water charges
- Insurance (landlord insurance, building insurance)
- Repairs and maintenance (not improvements)
- Advertising for tenants
These expenses are generally related to earning rental income, which is why they may be deductible.
Depreciation: A Key Non-Cash Deduction
One of the most significant property tax deductions is depreciation.
Depreciation recognises the wear and tear of certain parts of an investment property over time. Importantly, it’s 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 prepared by a qualified professional and applied by your accountant.
What’s the Difference Between Repairs and Improvements?
This is a common area of confusion.
Repairs and maintenance relate to fixing or restoring something to its original condition and may be deductible.
Improvements, on the other hand, generally increase the value or extend the life of the property and are treated differently for tax purposes.
Understanding the difference is important to ensure deductions are claimed correctly.
Tax Deductions Reduce Tax — Not Cash Flow
It’s important to understand what tax deductions actually do.
Deductions reduce your taxable income — they don’t put cash directly into your bank account.
This means you still need to be able to afford the property and manage repayments and expenses, even if the tax outcome improves.
Property Tax Deductions Often Change Over Time
Tax deductions aren’t fixed forever.
As loans change, interest rates move, and depreciation reduces over time, the size of your deductions may change.
This is why ongoing review is important rather than relying on assumptions made at purchase.
Why Getting Professional Advice Matters
Property tax deductions depend on legislation, individual circumstances, and correct record keeping.
Tax professionals such as
The Accountants
can help ensure deductions are applied correctly and that you’re not missing out — or claiming incorrectly.
Good tax advice provides clarity and confidence.
How Finance Structure Influences Tax Outcomes
While tax deductions are handled by your accountant, the way your loan is structured influences which expenses exist in the first place.
Interest rates, loan type, and how funds are used all affect tax outcomes.
This is why lending 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.
Should You Review Your Property Tax Position?
Understanding property tax deductions is a key part of investing well.
If you’re unsure what you can claim — or whether your loan structure supports your tax strategy — it may be time for a review.
👉 Book a conversation with Chase Douglas to understand how your finance structure fits into your broader property and tax strategy.
Informed investors make better long-term decisions.
