What tax benefits can I get from investing in property?

Answer

Investing in property may offer a variety of tax benefits, both immediate and longer term. As this table shows, many different types of expenses can be tax deductible while you hold the property as an investment.

Type of expense

Example

When can you claim a tax deduction?

Interest on a loan

Buying a rental property

Buying land to build a rental property

Buying a depreciating asset for the property, like an air conditioner

Financing renovations or improvements

Same tax year

Repairs and maintenance

Replacing part of the guttering or windows damaged in a storm

Replacing part of a damaged fence

Repairing an electrical appliance

Same tax year

Tenancy costs

Preparing a lease agreement

Evicting a tenant

Same tax year

Structural improvements

Adding a room

Building a retaining wall or fence

Over a number of years

Assets that are part of the property

Stoves

Air conditioners

Hot water systems

Over a number of years

Borrowing costs

Stamp duty charged on a mortgage

Loan establishment fees

Title search fees charged by the lender

Depends on the amount:

  • less than $100 can be deducted immediately
  • larger amounts are generally deductible over five years or over the term of the loan, whichever is less

This table is for illustrative purposes only. It’s not exhaustive and is subject to change. To make sure you don’t miss anything, talk to your tax adviser about how to claim the correct tax deductions.

What happens when you sell your investment property?

Many investors focus on the positive impact of tax deductions when deciding whether to invest in property. However, it’s important to remember the potential impact of capital gains tax.

If you bought an investment property on or after 20 September 1985 and you then sell it at a later date, then you may be liable for capital gains tax if you sell it for more than you paid to buy it.

You can also make a capital gain or loss from some capital improvements made since 20 September 1985 to a property you acquired before that date.

To work out whether you have made a capital gain on your property, visit the ATO website or speak to your tax adviser.

Important information

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.