You can deduct expenses from your rental income you include on tax returns. Not all rental expenses can be deducted. The expenses must relate to income-earning use, not private use.
Expenses you can deduct
The expenses you can deduct from your rental income are:
- the cost of insuring your rental property and the rates for the property
- payments to agents who collect rent, maintain your rental, or find tenants for you
- fees paid to an accountant for managing accounts, preparing tax returns and advice.
- repair and maintenance costs
- arranging a mortgage to finance the rental property
- drawing up a tenancy agreement
- getting a valuation required to get a mortgage. Not insurance valuations
- taking legal action to recover unpaid rent
- evicting a tenant
- mortgage repayment insurance
- depreciation on capital expenses
- utilities, insurance or rates portioned for rental use
- travel expenses for travelling to inspect your property or to do repairs
- legal fees involved in buying a rental property, as long as the expense is $10,000 or less.
You can also deduct interest on money you have borrowed to buy your rental property. You cannot deduct this if you have used some of the money:
- for something else
- to top up the mortgage for another purpose.