Property remains one of Australia’s most popular investment strategies, and for good reason.
It offers long-term capital growth, rental income, and valuable tax benefits. But many investors fail to take full advantage of the deductions and structures available to them.
At Pisani Group, we work with property investors across Australia to help them optimise their tax position, stay compliant, and maximise their returns. Here’s what you need to know.
What Can Property Investors Claim at Tax Time?
If you own a rental property, the ATO allows you to deduct a range of expenses against your rental income. Common deductions include:
| Deductible Expense | Notes |
|---|---|
| Loan interest | Only the interest portion of the loan, not principal repayments |
| Property management fees | Including advertising, inspections, and admin costs |
| Council rates and water | If you pay them on behalf of the tenant |
| Repairs and maintenance | Immediate deduction if it restores the property to original condition |
| Depreciation (capital works and assets) | Must be assessed by a qualified quantity surveyor |
| Insurance premiums | Landlord, building, and contents insurance |
| Strata/body corporate fees | Claimable if related to the income-producing area of the property |
Tip: Always keep detailed records and receipts. You’ll need them if the ATO comes calling.
Depreciation: The Overlooked Advantage
One of the most underutilised deductions by property investors is depreciation.
There are two types:
Capital works (Division 43):
Structural improvements (e.g. walls, floors, roofing) – usually depreciated at 2.5% per year over 40 years.Plant and equipment (Division 40):
Assets like ovens, carpets, air conditioners – depreciation depends on asset life.
New builds offer the highest depreciation benefits, but even older properties may qualify for capital works deductions.
For maximum accuracy, we recommend ordering a tax depreciation schedule from a qualified quantity surveyor.
Positive vs. Negative Gearing: Understand the Impact
Negative gearing: When rental income is less than expenses, the loss can offset other taxable income resulting in a lower tax bill.
Positive gearing: When rental income exceeds expenses. You’ll pay tax on the net income, but may enjoy stronger cash flow.
While both can be effective, your long-term strategy should consider not just tax benefits but capital growth, cash flow, and investment risk.
Ownership Structures Matter
How your investment property is held affects not only your tax outcome but also your asset protection, estate planning, and flexibility.
| Structure | Pros | Considerations |
|---|---|---|
| Individual | Simple, full CGT discount after 12 months | Taxed at marginal rate |
| Joint Ownership | Split income and deductions | Impacts both owners’ tax positions |
| Trust | Flexibility in distributing income | More complex setup and compliance |
| Company | Flat tax rate (25%) | No CGT discount, higher complexity |
| SMSF | Tax advantages in retirement phase | Strict compliance, limited borrowing rules |
Important: Seek professional advice before purchasing under a trust, company, or SMSF.
Timing Your Expenses and Income
Tax optimisation isn’t just about what you claim, but also when. A few strategies to consider:
Prepay deductible expenses (like insurance or interest) before 30 June
Schedule repairs or maintenance in the same financial year
Defer income or bring forward deductible expenses where appropriate
Offset capital gains with capital losses, if you’ve sold another asset in the same year
Key Compliance Reminders
Declare all rental income: including bond money retained, insurance payouts, or government subsidies
Keep a separate bank account for your rental income and expenses
Understand the difference between capital improvements and repairs: improvements must be depreciated, not deducted immediately
Smart property investment isn’t just about buying well. It’s about managing your numbers with strategy.
Let Pisani Group help you optimise your tax and grow your property investment returns.
