Day 18: Your Questions About Investment Property Tax Deductions Answered
Published: February 1, 2026
Reading Time: 9 minutes
Location Focus: Melbourne, VIC
Q: What expenses can I claim as tax deductions on my investment property?
A: Investment property expenses that are directly related to earning rental income are generally tax-deductible. These include mortgage interest (not principal), property management fees, maintenance and repairs, insurance, rates and taxes, utilities, advertising for tenants, and legal and accounting fees.
Q: Can I claim depreciation on my investment property?
A: Yes. Depreciation is a tax deduction that allows you to claim the decline in value of the building and fixtures over time. Depreciation is calculated based on the property's construction cost and useful life. A quantity surveyor can provide a depreciation report showing what you can claim.
Q: What's the difference between repairs and capital improvements?
A: Repairs maintain your property in its current condition and are tax-deductible. Capital improvements add value to your property or extend its useful life and are depreciated over time rather than deducted immediately. The distinction is important because it affects when you can claim the deduction.
Q: Can I claim home office expenses if I manage my investment property myself?
A: If you have a dedicated home office used exclusively for managing your investment property, you may be able to claim a portion of your home office expenses. However, the ATO has strict rules about home office deductions, so consult with a tax professional.
Q: Can I claim travel expenses related to my investment property?
A: Travel expenses to inspect your investment property or meet with property managers or accountants may be deductible. However, the ATO requires that travel be directly related to earning rental income. Personal travel is not deductible.
Q: What records should I keep for tax purposes?
A: Keep detailed records of all investment property expenses, including receipts, invoices, and bank statements. Keep records of rental income received. Keep records of any capital improvements or renovations. The ATO recommends keeping records for at least five years.
Disclaimer: This article provides general information about investment property tax deductions. Tax laws are complex and individual circumstances vary. Please consult with a qualified tax professional or accountant to discuss your specific tax situation.
Call to action: Need help structuring your investment property for tax efficiency? Call Frontier Finance at 0413 798 731. Our brokers can help you structure your investment loan to maximize tax benefits.