Property is easy to buy and surprisingly hard to own well. We help Gold Coast investors get the tax side right – rental income, deductions, gearing and the eventual sale – so the numbers work as hard as the bricks do.
Book a Chat Call (07) 5593 6060What we handle for property investors:
On the surface, an investment property is simple: you buy it, you rent it out, the rent pays the loan. Under the surface, it is one of the most heavily taxed and closely watched things an ordinary Australian will ever own. The Australian Taxation Office (ATO) receives data from your bank, your property manager, state land-title offices and sharing-economy platforms, and rental claims are one of its standing audit priorities. Get the detail right and property is a genuinely tax-effective way to build wealth. Get it wrong and a single misclassified expense can unwind years of careful saving.
A property tax accountant does the unglamorous work that makes the difference: sorting what you can claim now from what waits until you sell, keeping the records the ATO expects, and planning the moves – a renovation, a refinance, a sale – before they happen rather than after. The terms below come up constantly when we sit down with property investors, so it is worth understanding them in plain language.
Rent you receive is assessable income, and you declare it in the financial year you become entitled to it – not the year a tenant eventually pays. Anything else of value counts too: a retained bond you keep for damage, an insurance payout for lost rent, a reletting fee passed on to you. Against that income you offset your deductible expenses, and the result – your net rental position – is added to the rest of your income and taxed at your marginal rate.
That last point is why two investors with identical properties can have very different tax outcomes. Rental income stacks on top of your salary and any other income, so a high earner keeps less of each rent dollar but also gets more back from each deductible expense. Where a property is owned by more than one person, the income and the deductions are split strictly according to the legal ownership shares on the title – more on that below.
Deductions are where property tax is won or lost. The guiding idea is straightforward – an expense is deductible to the extent it relates to earning rental income – but the timing differs sharply from one expense to the next. Some you claim in full this year; others are spread over decades; a few are not deductible at all and instead reduce your tax when you sell.
The everyday running costs: loan interest (usually the single largest deduction), council rates, water and land tax, building and landlord insurance, property-manager commissions and letting fees, body corporate fees, advertising for tenants, pest control, cleaning and gardening, and the cost of repairs.
A repair restores something to its original condition – fixing a leaking tap, replacing a few broken roof tiles, mending a fence. It is deductible straight away. An improvement makes something better than it was or replaces it entirely – a new kitchen, a deck that wasn’t there before, replacing the whole roof. That is capital, and it cannot be claimed in one hit. Instead it is written off slowly as a capital works deduction, or added to your cost base for capital gains tax. A subtle but expensive trap sits in the first weeks of ownership: work done to fix problems that existed when you bought the place (“initial repairs”) is treated as capital, no matter how much it looks like a repair.
Two separate write-downs sit under the heading of depreciation. Capital works (Division 43) covers the structure itself – the building, plus structural improvements like a carport or a retaining wall. For residential property it is deductible at 2.5% of the construction cost each year for 40 years from completion, which means buildings constructed after about September 1987 still carry claimable value today. Plant and equipment (Division 40) covers the removable fittings – carpet, blinds, ovens, air-conditioners, hot-water systems – which decline in value over their own shorter lifespans.
The costs of setting up the loan – the loan establishment fee, lender’s mortgage insurance, title search and mortgage stamp duty – are borrowing expenses. They are deducted over five years, or the life of the loan if shorter (and claimed in full in year one if they total $100 or less). And a rule that surprises people every year: since 1 July 2017 individuals cannot claim travel to inspect, maintain or collect rent from a residential rental property. The drive to check on the place is simply not deductible.
“Gearing” just means borrowing to invest. A property is negatively geared when its deductible costs – mostly interest – are more than the rent it earns, producing a loss. That loss can be offset against your other income, including your salary, reducing your overall tax bill while you hope the property’s value grows. A property is positively geared when the rent exceeds the costs, so it makes a profit and adds to your taxable income. Neither is automatically better. Negative gearing suits investors betting on capital growth who can fund the shortfall; positive gearing suits those who want the property to pay its own way and produce income now.
When you sell an investment property for more than it cost you, the profit is a capital gain and forms part of your assessable income in the year you sell. For a property sold under contract, the capital gains tax (CGT) event happens on the contract date, not the settlement date – which can pull a gain into an earlier financial year than people expect. Your gain is the sale proceeds less your cost base, and your cost base is more than the purchase price: it includes stamp duty, legal and agent fees, and those capital improvements you couldn’t deduct along the way. Good records over the whole life of the property are what keep this number honest.
If you have owned the property for at least 12 months, individuals currently qualify for the 50% CGT discount – you are taxed on only half the gain. The home you actually live in is generally exempt under the main residence exemption, though that gets more complex if you move out and rent it, or move in after renting.
To claim depreciation properly you usually need a tax depreciation schedule – a report prepared by a qualified quantity surveyor that values the building and its fittings and sets out the deductions you can claim each year. Your accountant cannot simply estimate these figures; the ATO expects them to be professionally substantiated. A schedule is a one-off cost, is itself tax-deductible, and typically pays for itself many times over on a property with claimable structure or new fittings.
Whether it is worth getting comes down to the property. A newer home, or one you have renovated, usually has strong deductions to capture. An older established property where the second-hand plant and equipment can no longer be depreciated may have less to claim – though the capital works deduction on the structure is often still well worth a report. We will give you an honest read on whether a schedule will earn its keep before you spend a cent on one.
Co-ownership. When a property is owned by more than one person, income and deductions follow the legal ownership recorded on the title – 50/50 as joint tenants, or whatever the shares are as tenants in common. You cannot choose to push more of the loss onto the higher earner to save tax; the split follows the title, full stop. Deciding whose name, and in what proportion, a property goes onto is a decision best made before you buy, because changing it later can itself trigger stamp duty and CGT.
Trusts. Some investors hold property in a family or unit trust for asset protection and flexibility in distributing income. Trusts come with their own rules – notably that a trust generally cannot distribute a rental loss out to beneficiaries; the loss is trapped until the trust has income to absorb it – so the structure has to suit your wider plan, not just one property.
Property in an SMSF. A self-managed super fund can own investment property, with significant tax advantages and equally significant rules – you and your family generally can’t live in it or rent it, borrowing is tightly restricted, and the recent reforms treat super-held property differently again. If buying property through super is on your mind, start with our self-managed super fund page, then talk to us before you commit to anything.
Most property problems are not dishonesty – they are missing paperwork. Keep records for the whole time you own the property and for five years after you sell, because the cost base you’ll need for CGT reaches all the way back to settlement. The ATO matches your return against bank, property-manager and land-title data, so the claims that draw attention are the ones that don’t line up with that data.
Redraw against your investment loan for private spending – a car, a holiday – and that slice of the interest stops being deductible. A very common, very avoidable error.
Claiming a new kitchen or initial repairs as an immediate deduction instead of capital. The ATO actively reviews large repair claims.
A property used by you, family or friends part of the year can only be claimed for the periods it was genuinely available for rent at market rent.
Income or deductions split in different proportions to the legal ownership on the title – a quick flag in the ATO’s data matching.
We are a Gold Coast firm at Varsity Lakes, and property investors are a large part of what we do. The aim is simple: that you understand your own position, claim everything you are entitled to, claim nothing you are not, and never get a surprise from the ATO or from your own return.
Your rental income and deductions prepared accurately each year, woven into your wider tax return – whether you own one unit or a portfolio.
Interest, depreciation, repairs and borrowing costs classified correctly, coordinated with a quantity surveyor’s schedule where it pays to have one.
Modelling the after-tax cost of holding, timing repairs and sales, and planning around the 2027 gearing and CGT changes before they land.
Whose name to buy in, when a trust or SMSF makes sense, and working out the CGT on a sale well before you sign a contract.
A free, no-pressure conversation about your property, your goals and where you’d like to be.
We look at your ownership, loans, deductions and CGT position, and tell you plainly what we find.
A clear scope and a fixed fee for exactly what you need, agreed before any work starts.
Returns each year and advice when the big moves come up, so nothing is left to the last week of June.
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