The following expenses can be deducted from your rental income:
- rates and insurance and body corporate levies
- interest paid on money borrowed to finance your property
- agents fees and commission relating to the rental of the property
- repairs and maintenance (except if they substantially improve the property)
- motor vehicle and travel expenses
- legal fees for arranging the mortgage or finance to buy the property
- from the 2010 income year and beyond:
- mortgage repayment insurance
- accounting fees for the preparation of accounts
Capital or private expenses can't be deducted from your rental income. Capital
expenses are costs you incur to buy or increase the value of a capital asset.
Private expenses are incurred for your own benefit and are not connected with
producing taxable income.
The following are non-deductible expenses:
- the purchase price of a rental property
- the capital part of any mortgage repayment(s)
- interest on money which you borrow for some purpose other than financing the rental property, even if you use the rental property to secure such a loan
- any repairs and maintenance that go beyond replacement and are in fact improvements to the property
- real estate agent's fees incurred as part of buying or selling the property
- the cost of making any additions or improvements to the property.