An expense is not automatically a deduction
Rental expenses have different tax treatments. Some may be deductible in the year incurred, some over time, and some form part of a capital-gains calculation. Private costs and loan principal are not rental deductions. Apportionment may be needed for private use or part-year rental.
Use this page to organise your records and the questions for your tax agent. It does not establish eligibility for a particular claim.
Cash flow records the money spent. The tax treatment determines whether and when a deduction is available.
Build your expense file
| Expense | Treatment to check | Keep |
|---|---|---|
| Property management, rates and insurance | Potential current deduction for the rental portion. | Invoices, statements and rental dates. |
| Loan interest | Trace how the borrowed funds were used. Separate principal. | Loan statements and records of withdrawals. |
| Repairs and maintenance | Distinguish rental wear and tear from initial repairs and improvements. | Invoice, photos and description of the work. |
| Borrowing expenses | May need to be spread across years. | Settlement statement and lender fee breakdown. |
| Buildings and depreciating assets | Separate capital works from eligible assets. | Purchase and construction records; any depreciation schedule. |
| Purchase duty and acquisition costs | Generally capital costs rather than immediate rental deductions. | Contract and settlement records. |
Download expense checklist CSV ↓
Sources: ATO: rental expenses and ATO: expenses claimed over several years.
Repairs and improvements need different records
Fixing damage from a tenancy is different from remedying a defect present when you bought the property. Replacing an entire structure or improving it can also have different treatment. The invoice label “repairs” does not decide the answer.
For example, record whether a plumber repaired a leaking fitting or installed an upgraded system. Keep the work description alongside the amount rather than grouping both under an unexplained annual allowance.
Read the ATO guidance on repairs and maintenance.
Keep the cash and tax views separate
If a $1,000 expense is fully deductible and reduces tax at an assumed 32% rate, the possible tax reduction is $320. You still spent $1,000; the remaining cost is $680. That example assumes the deduction can be used in that year.
In BrickOutlook, enter actual cash costs first. The optional tax scenario uses your marginal rate and deduction assumptions. Principal and capital spending remain separate. Negative gearing and holding cost explains the next step.
Make next year's return easier
Keep a folder per property and tax year. Record the date, supplier, amount, purpose, rental period and any private portion. Save source documents, not just spreadsheet totals. Mark uncertain items for review rather than guessing their treatment.