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Legal fees
Where your total legal fees for any given year are $ 10,000 or less , you can claim a deduction for the legal expenses involved with buying a rental property .
If you ’ re in the business of providing residential rental accommodation , you can also claim legal fees incurred when selling a rental property from your portfolio .
Note : We advise speaking to your chartered accountant to ensure you meet the criteria to be classed as being ‘ in the business ’.
Repairs & maintenance
You can claim back the costs for any repairs to the property or general maintenance . However , if you ’ re doing the work yourself you can only claim for materials , not your own time .
If the work is an improvement to the property rather than a repair , then you can ’ t claim that cost as an expense .
Examples of repairs and maintenance you may be able to claim :
• Replacing a broken shower head
• Plastering and painting a crack in the wall
• Replacing a blown element in a hot water cylinder
Examples where maintenance may be classed as a capital improvement and cannot be claimed :
• Renovating a rundown property to significantly improve or alter it before renting it out .
• Undertaking work that significantly improves a property , e . g . removing a deteriorated wall and replacing it with a new bedroom space .
The distinction between repairs and improvements can be tricky . If you ’ re unsure whether work done on your property is repairs or maintenance we suggest you talk to a chartered accountant .
Other
Other costs you may be able to claim include :
• Body corporate fees
• Fees for arranging a mortgage to finance a rental property
• Valuation fees
• Water rates ( only if paid by the landlord )
• Gifts for tenants
• Travel associated with managing your property You can ’ t claim deductions for capital expenses , private expenses , or expenses that do not relate directly to your rental property .
Depreciation
Depreciation is an allowance you can claim to cover the costs of wear and tear and general ageing of furniture and fittings you ’ ve bought for your rental property . You can combine assets worth less than $ 5,000 , rather than depreciating them separately .
You cannot claim depreciation on the property ' s land or buildings , however , this wasn ’ t always the case . This is a complex area and for more information we suggest you speak with a chartered accountant .
Low Value Assets
If you purchase a low value asset for your rental property ($ 1,000 or less ) you can fully deduct the cost of that asset at the time of purchase , removing the need to depreciate the asset over its useful life .
Body Corporate Levies
If your rental property is an apartment in a unit title development you may be able to deduct body corporate levies from your rental income , however , it depends on what the levied funds will be used for .
General levies like those used to pay for annual maintenance or administration ( such as painting or insurance ) will normally be deductible . Levies raised to pay for more significant capital improvements are not deductible .
In situations where an amount levied relates to general repairs and capital improvements , you must be able to reasonably determine the portion that relates to the repairs in order to claim a deduction .