Tax basics for rental owners

Income and what’s taxable

Rent you receive is taxable income and must be declared, but the good news is that many of the costs of running a rental are deductible against it. The key is understanding which expenses qualify, keeping every receipt, and recording income and outgoings accurately throughout the year so tax time is a matter of tidy records rather than guesswork.

Common deductible expenses

Typical deductible costs include rates, insurance, property management fees, repairs and maintenance, accountancy fees and certain other running costs. Repairs that restore the property are generally deductible, while improvements that add value are treated differently as capital. Knowing the line between a repair and an improvement matters for how, and when, you can claim.

The rules that change

Areas like interest deductibility and the bright-line test, which can tax gains on a property sold within a certain period, have shifted several times in recent years. Because these settings change with government policy, it’s essential to work from current rules rather than old assumptions, and to plan purchases and sales with the latest position in mind.

Get professional advice

Tax on rental property is one area where a property-savvy accountant usually pays for themselves, through deductions claimed correctly, structures set up well, and mistakes avoided. Treat this as general information, not advice for your situation, and confirm the current rules and your specific position with a qualified professional before you act.