As July rolls in and the new financial year kicks off, it’s time to turn your attention to one thing: maximising your tax deductions. If you own a rental property in Australia, now is the perfect time to get organised and ensure you’re not leaving money on the table. From repairs to depreciation, interest to agent fees, there are many ways landlords can claim more deductions this July.
This post will help you understand the deductions you’re entitled to and ensure you’re fully compliant with Australian Taxation Office (ATO) rules.
Let’s dive into how to claim more rental property tax deductions this month.
Why July Matters for Property Investors
At the start of the financial year, property investors should take stock of the past year’s expenses and plan strategically for the year ahead. In July, you can organise your papers and check your deductions, and speak with your rental property tax accountant in Melbourne. Getting ahead now can mean:
- A larger refund
- Better cash flow planning
- Reduced chances of ATO audits
- More time to prepare documents and fix errors
What You Can Deduct Right Now
Many expenses related to rental properties can be deducted right away. These include:
- Council rates and water charges
- Loan interest (only the interest portion, not repayments)
- Repairs and maintenance
- Property management fees
- Insurance (building, contents, landlord)
- Depreciating assets under $300
Keep in mind that these costs should be clearly associated with receiving rental income and justified by legitimate receipts.
What Needs to Be Claimed Over Time
Certain items need to be amortised over a number of years or depreciated. These include:
- Capital works (like renovations or structural improvements)
- Borrowing expenses (e.g., loan setup costs)
- Depreciating assets over $300 (e.g., appliances, blinds)
Using a professional depreciation schedule can help you capture all allowable claims.
Expenses You Cannot Claim
Your rental property’s expenses aren’t all tax deductible. Common mistakes include trying to claim:
- Travel expenses (no longer deductible for individual landlords)
- Acquisition and disposal costs (e.g. stamp duty, legal fees at sale)
- Expenses associated with the property’s personal use
- Costs for second-hand depreciating assets in properties bought after 9 May 2017
Partial Use and Private Use: Apportion Correctly
You have to allocate expenses appropriately, whether your property is utilised for personal vacations or is only rented out for a portion of the year. The same applies if:
- You only lease a portion of your property
- You rent at below-market rates
- A loan’s percentage is used for personal expenses.
For the ATO, inaccurate apportionment is a warning sign. Bookkeepers and tax agents in Melbourne can assist you with calculating this correctly.
Repairs vs Improvements: Know the Difference
Understanding the difference between a repair and an improvement is crucial:
- The property is returned to its original state through repairs deductible in the same year.
- Improvements enhance value or functionality — deductible over several years
For example, fixing a broken tap is a repair. Replacing your kitchen cabinets is an improvement.
Maximise Depreciation Deductions
Don’t forget depreciation. It’s among the deductions that landlords most frequently fail to claim. Engaging a quantity surveyor for a depreciation schedule ensures:
- All eligible building and asset costs are captured
- You comply with the latest rental property tax laws
Over the duration of the property’s life, this will save your thousands of dollars.
Check Your Contractors’ ABNs
If you’ve paid contractors (plumbers, electricians, etc.), they must provide a valid ABN. You may need to withhold 47% of their payments if they don’t. Failing to do so may result in the ATO denying the deduction entirely.
Always check the ABN status via abr.business.gov.au.
Recordkeeping Tips for July
Good records are essential. Ensure you:
- Keep all receipts and invoices
- Save loan statements, agent summaries, and insurance documents
- Retain your lease agreements
- Store depreciation schedules
Cloud bookkeeping tools managed by professionals can help you stay ATO-ready year-round.
Get Expert Help to Claim More
This July, take the stress out of tax time by working with experienced professionals like SMH Accountants & Advisors. We are offering:
- Rental property tax assessments
- Expense categorisation and apportionment
- Bookkeeping services
- Tax planning services
- Depreciation schedule reviews
- Gearing strategy planning
Whether you own one investment property or several, our experienced team can help you navigate complex rental property tax rules, identify every eligible deduction, and structure your finances for long-term growth. From personalised tax planning to smart bookkeeping solutions, we’ve got you covered. Book a free consultation today and take control of your financial future this July.
Final Thoughts
July isn’t just the start of a new financial year. It’s your best opportunity to go over, reset, and get back what you’re entitled to. You may increase your rental property deductions and have better financial results this year with professional advice and careful planning.
Don’t wait until tax time. Claim more deductions this July.
FAQ’s
1. Can I claim deductions on a vacant rental property for part of the year?
Yes, you can still claim deductions for periods your property was genuinely available for rent. However, you must apportion your expenses if the property was used privately or was not advertised at market rates during that time.
2. What is the difference between a repair and an improvement for tax purposes?
Repairs are fixed to restore the property to its original condition and are fully deductible in the year they’re incurred. Improvements add value or extend the property’s life and must be claimed over time as capital works.
3. Is it necessary to have a depreciation schedule for my rental property?
While not mandatory, a professionally prepared depreciation schedule can help you claim the maximum allowable deductions for wear and tear on your property and assets, leading to substantial tax savings over time.
