It’s the start of a brand new financial year and that means it’s tax time, which can be difficult to navigate, especially if you are a property investor.

Here is a rundown of expenses you can claim now as a property investor, according to the very latest information from the ATO.

For starters you can generally claim an immediate deduction against your annual income for expenses outlaid for the management and maintenance of the property. That includes interest paid on loans. If your property is negatively geared (your deductible expenses are more than the rent you earn for the property) you may be able to deduct the full amount of rental expenses against your rental and other income (wages and/or business income etc.).

Here is a list of expenses you can claim an immediate deduction for against the income you earned in the 2019/20 financial year:

• Advertising for tenants
• Body corporate fees and charges
• Council rates
• Water charges
• Land tax
• Cleaning
• Garden maintenance, including lawn mowing
• Pest control
• Insurances
• Property management fees
• Repairs and maintenance on the property (see below)
• Certain legal expenses
• Interest charges on a loan you took out to purchase the property, as long as the property is rented out or available for rent and you are not occupying it yourself (even for a short time)
• Pre-paid services (those that provide for services extending beyond the current income year, such as some repairs and maintenance work)

Repairs and Maintenance

Repairs and maintenance can only be claimed as a full tax deduction now if the expense directly relates to damage or wear and tear that occurred as a result of renting out the property and if the property continues to be rented out.

Examples of repairs you can claim immediately are:

• Replacing a section of guttering damaged in a storm
• Replacing broken windows
• Repairing electrical appliances
• Replacing part of a fence damaged by a falling tree

Unlike repairs, maintenance generally involves keeping your property in a tenantable condition. Examples of maintenance work you can claim now are:

• Repainting
• Oiling a worn deck or cleaning a swimming pool
• Mould removal
• Plumbing maintenance

You can’t claim the total cost of repairs and maintenance in the year you made them if they did not directly relate to wear and tear or damage caused while renting out the property. For instance, if you decide to improve your investment property between tenancies in order to make it more desirable to tenants and improve the capital value of the property (such as remodelling a bathroom or kitchen or adding a pergola) the cost of those works must be claimed over more than one year as capital works deductions. Click here for more information.

To read the latest information from the ATO on claiming rental and investment property expenses, including detailed and helpful case studies, click here.