What Can You Claim on an Investment Property? The 2026 Deductions Map, Current After the Rules Changed
- The deductible list is long and mostly unchanged: loan interest, management fees, rates, insurance, repairs, depreciation and borrowing costs while the property earns or genuinely seeks rent.
- What the 12 May 2026 changes moved is not what you claim but when losses help you: established properties bought since then have losses quarantined, while new builds keep negative gearing from 1 July 2027.
- The biggest deduction, interest, is decided by loan structure: redrawing investment debt for personal spending contaminates deductibility, while an offset account keeps it clean.
- This is general information, not tax advice: your accountant applies these rules to your return. What we do is structure the loan so there is something clean for them to work with.
- The deductions map, item by item
- What you cannot claim, and where it goes instead
- Repairs versus improvements: the oldest trap in property tax
- Depreciation: where new builds quietly win
- The 12 May split: claims stayed, timing moved
- Loan structure: where deductions are won and lost
- Frequently asked questions
The deductions map, item by item
An Australian investment property owner can generally claim, in the year they are incurred: interest on the investment loan, property management fees, council rates and landlord-paid water charges, land tax, building and landlord insurance, body corporate fees, advertising for tenants, accounting fees relating to the property, pest control, cleaning and gardening, and genuine repairs and maintenance. The property must be rented or genuinely available for rent for the expenses to be deductible, and individual circumstances are a matter for a registered tax professional.
While the property is rented, or genuinely on the market for rent, the running costs of being a landlord are broadly deductible in the year you pay them. The map:
| Item | How it is generally treated |
|---|---|
| Loan interest (investment portion) | Deductible now: usually the largest claim, and structure-dependent (see below) |
| Property management fees and letting commissions | Deductible now |
| Council rates, landlord-paid water, land tax | Deductible now |
| Building, landlord and contents insurance | Deductible now |
| Body corporate fees (administrative and general funds) | Deductible now; special-purpose capital levies are usually capital |
| Genuine repairs and maintenance | Deductible now, with the improvement trap covered below |
| Advertising for tenants, accounting fees, pest control, gardening | Deductible now |
| Depreciation: building and eligible assets | Deducted over time, rules differ for new versus established (below) |
| Borrowing costs: establishment fees, LMI on the investment loan | Deducted over five years, or the loan term if shorter |
Two disciplines make all of it real at tax time: records, because a deduction without a receipt is a story, and availability, because expenses only deduct while the property earns or genuinely seeks rent. Our EOFY checklist covers the record-keeping sweep.
What you cannot claim, and where it goes instead
Not claimable against rental income: the purchase price and stamp duty, which instead join the capital gains tax cost base; the principal portion of loan repayments; travel to inspect a residential rental, removed for individual investors in 2017; expenses during personal use of the property; and initial repairs fixing problems that existed at purchase, which are treated as capital. Several of these still reduce capital gains tax on sale, so the records matter even when the deduction is not immediate.
The refused list is short but expensive to misunderstand:
- Stamp duty and the purchase price. Not deductible against rent. They join the cost base and reduce capital gains tax when you eventually sell, which is why the settlement statement is a document to keep for decades.
- The principal in your repayments. Only the interest deducts. A principal-and-interest repayment is part expense, part savings, and only the expense half claims.
- Travel to inspect the property. Removed for individual residential investors back in 2017, and still one of the most commonly attempted claims.
- Anything during personal use. The beach house that rents in summer and hosts you in winter deducts proportionately, not fully.
- Initial repairs. Fixing what was already broken when you bought is capital, not a repair, however soon you do it.
Repairs versus improvements: the oldest trap in property tax
A repair restores something to its previous condition and is deductible immediately: fixing a broken fence, patching a roof leak, replacing a broken window pane. An improvement makes something better than it was, and is capital, deducted slowly through depreciation: replacing the whole fence with a better one, a new kitchen, restumping. Initial repairs at purchase are capital regardless. The distinction is judged item by item, and borderline cases are exactly what a registered tax professional is for.
The distinction that launches a thousand amended returns: a repair restores; an improvement upgrades. Patch the leaking section of roof: repair, deduct now. Replace the whole roof in colorbond because it was tired: improvement, capital, depreciate over decades. Fix the broken window: repair. Replace all the windows with double glazing: improvement.
The practical rule for a new landlord: document the property’s condition on day one, keep invoices that describe the work precisely, and when a job mixes both, have the tradesperson invoice the repair and the upgrade separately. Your accountant will thank you, and the difference in your refund can be thousands.
Depreciation: where new builds quietly win
Depreciation runs on two tracks: capital works deductions for the building structure, generally 2.5 per cent a year for residential construction after September 1987, and plant and equipment deductions for assets like appliances, carpets and air conditioning. Since 2017, buyers of established residential properties cannot claim plant and equipment depreciation on assets that came with the property, only on new assets they purchase, while new builds claim both tracks in full. A quantity surveyor’s depreciation schedule is the document that captures all of it.
Depreciation is the deduction people forget because nobody sends an invoice for it. Two tracks:
- The building itself: residential structures built after September 1987 generally claim 2.5 per cent of construction cost a year for forty years. On any reasonably modern build that is thousands a year, every year.
- The stuff inside: appliances, carpet, blinds, air conditioning, hot water systems. Here sits the 2017 rule that reshaped the maths: buy an established property and the plant and equipment that came with it claims nothing; only new assets you add claim. Buy a new build and both tracks claim in full.
Which stacks onto the negative gearing split below: after the 2026 changes, new builds keep negative gearing and the full depreciation menu, a double advantage the established market does not get. And whichever you own: a quantity surveyor’s depreciation schedule, a few hundred dollars once, is routinely the best-returning document in property investment. And with holding costs in focus since the budget, our piece on the new 40-year investor loans covers the cashflow lever lenders just built for exactly this problem.
The 12 May split: claims stayed, timing moved
The 2026 negative gearing changes did not remove any deduction. Every expense that was claimable remains claimable, and rental profits are taxed as before. What changed is the treatment of losses: for established properties purchased after 7:30pm AEST on 12 May 2026, rental losses no longer offset salary and are instead quarantined, carried forward against future rental income or the capital gain. New builds retain negative gearing from 1 July 2027, and properties held before 12 May 2026 keep the old treatment.
The most misunderstood sentence in Australian property this year, so here it is plainly: the negative gearing changes removed no deductions. Interest still claims. Rates still claim. Depreciation still claims. What moved is what happens when the claims exceed the rent:
- Established, bought after 7:30pm on 12 May 2026: the loss is quarantined: banked and carried forward against future rental profits or the eventual capital gain, instead of reducing this year’s salary tax.
- New builds: negative gearing continues from 1 July 2027: losses offset salary as before.
- Anything you owned before 12 May 2026: the old treatment continues.
So the deductions map above is unchanged; what changed is the cash-flow timing of the relief, which is why established properties now get judged on yield, as our step-by-step investment guide works through, and why the borrowing-capacity effects in our negative gearing analysis caught lenders’ attention before most investors noticed. If the mechanism itself is unfamiliar, the full negative gearing explainer, worked examples included, builds it from scratch.
Loan structure: where deductions are won and lost
Interest deductibility follows the purpose of the borrowing, which makes loan structure decisive. Redrawing from an investment loan for personal spending creates a mixed-purpose loan whose interest must be apportioned, permanently complicating the claim, while parking spare cash in an offset account reduces interest without touching deductibility. Equity released from a home to fund an investment deposit is generally investment-purpose borrowing, kept cleanest as a separate split. Structure is set at the start and expensive to untangle later.
Here is the section that is genuinely our lane, because the biggest deduction on the map is decided before tax time, at the loan desk. The rule underneath everything: interest follows the purpose of the borrowing, not the property the loan is secured against. Three consequences:
- Redraw contaminates. Pull $20,000 back out of the investment loan for a car, and the loan is now part investment, part personal: every interest payment forever after must be apportioned, and the claim shrinks and complicates permanently. This is the most common self-inflicted wound in property tax.
- Offset protects. Park the same $20,000 in an offset against the investment loan and the interest bill falls identically, but the loan’s purpose stays pure: withdraw for anything, whenever, deductibility untouched. For investors, offset versus redraw is not a preference, it is a tax outcome. Our offset checker confirms yours is doing its job.
- Splits keep the story clean. Equity released from your home to fund an investment deposit is generally investment-purpose borrowing, and structuring it as a separate split, rather than blending it into the home loan, keeps the deductible interest identifiable in one line. Accountants call this the difference between a ten-minute return and a forensic reconstruction.
None of this is tax advice; the apportionment maths belongs to your accountant. What it is, is the reason investors benefit from a broker who structures for the return as well as the rate: the structure decides what your accountant has to work with.
The biggest deduction is decided at the loan desk. Structure it deliberately.
Purpose-clean splits, offset where it protects, and a lender whose products fit an investor’s tax life. Whether you are buying your first investment property or restructuring one you own, one conversation sets it up properly, and your accountant stays in the loop where the tax calls belong. Former bankers, no cost, no obligation.
Book a chat with a former bankerFrequently asked questions
What can you claim on an investment property in Australia?
While the property is rented or genuinely available for rent: loan interest, property management fees, council rates, landlord-paid water, land tax, insurance, body corporate fees, advertising, accounting fees, pest control, gardening, genuine repairs, depreciation, and borrowing costs spread over five years. Individual circumstances belong with a registered tax professional.
Can I claim my full mortgage repayment?
No, only the interest portion. The principal component reduces your loan rather than your tax. On interest-only loans the whole repayment is interest, which is one reason investors weigh that structure, though it carries its own trade-offs.
Is stamp duty tax deductible on an investment property?
Generally no, not against rental income. It forms part of the capital gains tax cost base and reduces the taxable gain when you sell, so the record keeps earning its keep decades later.
What is the difference between a repair and an improvement?
A repair restores something to its former condition and deducts immediately; an improvement makes it better than it was and depreciates as capital over time. Fixing what was already broken when you bought, an initial repair, is capital regardless of timing.
Can I claim depreciation on an established property?
Partly. Capital works deductions on the building generally still apply for residential construction after September 1987. But since 2017, plant and equipment that came with an established property, appliances, carpets and the like, cannot be claimed by individual buyers; only new assets you add can. New builds claim both tracks in full.
Did the 2026 negative gearing changes remove deductions?
No. Every deduction that existed still exists. What changed is loss treatment: for established properties bought after 7:30pm on 12 May 2026, losses are quarantined against future rental income or the capital gain rather than offsetting salary, while new builds keep negative gearing from 1 July 2027 and pre-existing holdings keep the old treatment.
Does redrawing from my investment loan affect my tax deduction?
Yes, materially. Redraw used for personal spending makes the loan mixed-purpose, and the interest must be apportioned from then on, permanently shrinking and complicating the claim. Spare cash generally works better in an offset account, which reduces interest without touching the loan’s purpose. Confirm your situation with your accountant.
Do I need a quantity surveyor’s depreciation schedule?
If your property has meaningful depreciation to claim, almost certainly. It is a one-off document, typically a few hundred dollars, that itemises decades of building and asset deductions your accountant cannot otherwise substantiate. For newer builds especially, it is routinely the best-returning paperwork in the whole investment.
The honest summary
The deductions map is generous, stable and mostly unchanged by this year’s noise: the running costs of being a landlord claim now, the capital costs claim slowly or at sale, and the 12 May split moved the timing of loss relief rather than the claims themselves. The two places investors actually leak money are older than any rule change: treating improvements as repairs, and wrecking interest deductibility with careless loan structure. The first is your accountant’s territory. The second is decided the day the loan is set up, which is exactly where we come in.
Claims are annual. Structure is forever.
Purpose-clean lending, offset in the right place, splits your accountant will love, and a rate worth holding. One conversation before you buy, or a restructure review if the loan grew organically. Former bankers, no cost.
Book a chat with a former bankerAbout the author. Ahmed Lotfi is co-founder of Everstone Finance and a former banker who now works as a mortgage and finance broker in South Yarra, Melbourne, arranging home, investment and commercial lending for clients across Australia. Everstone Finance operates under the Best Interests Duty as Credit Representative 574314 of LMG Broker Services Pty Ltd, Australian Credit Licence 517921.