Tax Benefits for Property Investors: Deductible Expenses You Should Know

If you own a rental property, you can deduct various expenses on your annual tax return. This includes any borrowing costs and expenses related to arranging financing for the purchase.

Tax season can be advantageous for Australians with rental properties, but it’s crucial to understand which fees are deductible and which are not.

Here’s a rundown of the costs that you can write off at the end of the financial year:

• Loan establishment fees

• Amortisation of lenders mortgage insurance (insurance taken out by the lender and billed to you)

• Title search fees charged by your lender

• Costs for preparing and filing mortgage documents (including legal fees)

• Mortgage broker fees

• Fees for a valuation required for loan approval

• Stamp duty charged on the mortgage

• Strata fees

• Council rates

• Property management fees

• Land tax

Here are the fees that you cannot include on your tax return:

• Stamp duty on the transfer of the property title (unless you live in the ACT, where it is deductible) - this is added to the capital gains tax cost base of the property when you sell it.

• Insurance premiums associated with the loan and

• Borrowing expenses are where the loan is taken out for private purposes (for example, it is used to purchase your family home).

• If the property ownership name differs from the name on the loan then this can also reduce the interest tax deductibility of the loan.