10 Ways to Minimise Tax as a Property Investor

Aside from wealth creation, one of the biggest benefits of owning investment property in Australia is the range of tax deductions and concessions available to savvy investors.

Yet many people still miss out on thousands of dollars in potential savings each year.

Whether you own one rental property or a growing portfolio, these tips can help you improve cash flow and boost returns.

1. Claim All Rental Property Tax Deductions

You can claim a wide range of expenses on your investment property, including:

• Loan interest

• Council and water rates

• Strata/body corporate fees

• Property management and leasing fees

• Insurance

• Maintenance and repairs

Tip: Keep clear records and receipts to substantiate every claim come tax time.

2. Use a Quantity Surveyor for Depreciation Schedules

Depreciation is one of the most overlooked tools to legally reduce your tax bill. It covers:

• Capital works (Division 43): Structural items like walls, floors, and windows

• Plant and equipment (Division 40): Items like carpets, appliances, and blinds

A tax depreciation schedule from a qualified quantity surveyor ensures you don’t miss out on thousands in deductions over the life of your property.

3. Take Advantage of Negative Gearing (Only recommended with advice from a tax expert)

Negative gearing allows you to offset losses from your investment property against other taxable income (like your salary), potentially reducing your overall tax.

It is especially effective in high-income years or if you are investing for long-term capital growth.

4. Prepay Interest and Expenses Before 30 June

Investors can prepay up to 12 months of loan interest and other property-related expenses to bring forward deductions into the current financial year.

Ideal if:

• Your income is higher this year

• You're expecting a tax bill and want to reduce it

• You want to boost your refund before EOFY

5. Split Loans Strategically (Debt Recycling)

By separating deductible (investment) debt and non-deductible (home) debt, you can maximise interest deductions while paying down your home loan faster.

Example: Use an interest-only loan for your rental, funnel all surplus cash into your home loan, then re-borrow to invest again.

This keeps your finances lean and tax-smart.

6. Consider Holding Property in a Family Trust (Corporate trustee recommended)

Using a discretionary trust to hold investment properties gives you:

• Flexibility in distributing income to lower-taxed family members

• Potential asset protection

• Long-term estate planning benefits

Note: Trusts don’t allow negative gearing in your personal return — always seek advice from a tax professional before setting one up.

7. Maximise Capital Gains Tax (CGT) Concessions

When selling, smart timing and planning can reduce your CGT liability:

• Hold for 12+ months to access the 50% CGT discount

• Time the sale in a lower-income year

• Offset capital gains with capital losses elsewhere

• Owning property jointly with a lower-income spouse can also be tax-effective.

8. Claim Borrowing Costs Over Five Years

When taking out your investment loan, you’ll face borrowing costs like:

• Loan application fees

• Lender’s mortgage insurance (LMI)

• Title search and mortgage registration fees

These are deductible over 5 years (or immediately if <$100). Make sure they’re not overlooked at tax time.

9. Use an Offset Account, Not Redraw

Using a 100% offset account instead of paying down the loan directly ensures the interest remains fully deductible.

If you redraw from a loan and use those funds for private purposes, the ATO may deny part of your interest deduction — offset accounts avoid this issue altogether.

10. Work with a Property Tax Specialist

The best tax strategy? Partnering with a property-savvy accountant.

They will help you:

• Structure your loans and ownership properly

• Identify missed deductions

• Keep you ATO-compliant

• Minimise tax legally and effectively

Don’t underestimate the value of expert guidance tailored to your situation.

Minimising tax as a property investor in Australia isn’t about cutting corners — it’s about understanding the rules and using them to your advantage.

Each of the strategies above can legally reduce your tax burden and improve your cash flow. But the earlier you plan, the better the results.

Note: Above article is for information purposes only and should not be considered tax advise.