Top 5 Tax Deductions for Investors With Multiple Investment Properties

Australians see owning two or more investment properties as a pathway to self-funded retirement— but before you make it to retirement, owning multiple investment properties also opens opportunities to legally reduce your tax bill through smart deductions.

The more properties you hold, the more important it is to understand what you can and should be claiming.

Here are the top 5 tax deductions every multi-property investor in Australia should know:

1. Loan Interest

If you’ve borrowed money to purchase, renovate, or improve your investment properties, the interest on that loan is generally tax deductible. This is often the largest ongoing deduction for most investors.

• What’s deductible:

• Interest on the loan (but not the principal)

• Ongoing loan fees (e.g. monthly service fees)

• Mortgage redraw fees (if the redraw is used for the property)

Note: If you’ve refinanced or used equity from one property to buy another, keep good records showing the purpose of each loan split. This helps your accountant properly apportion the interest deduction.

2. Depreciation on Building and Assets

Depreciation allows you to claim the wear and tear on the building structure and its fixtures and fittings over time. This can be a massive deduction, especially if your properties are newer or have been recently renovated.

Two main types:

• Capital works deduction (Division 43): Covers the building structure. Usually 2.5% per year for 40 years.

• Plant and equipment (Division 40): Covers removable items like air-conditioners, carpets, blinds, etc.

Note: A depreciation schedule prepared by a qualified quantity surveyor can help you unlock thousands in tax deductions every year. It’s a one-off cost that pays for itself.

3. Property Management and Maintenance Costs

All the costs related to managing and maintaining your properties are generally deductible in the year they’re incurred.

• Common deductions include:

• Property manager fees and letting fees

• Council rates, water rates, and land tax (where applicable)

• Cleaning, gardening, pest control

• Repairs (but not initial repairs or improvements)

Note: Repairs must be to fix damage or deterioration while the property is rented. Improvements that increase the property’s value are capital in nature and depreciated over time.

4. Travel Costs to Inspect Properties (If Using a Business Entity)

Since July 2017, travel to inspect your rental properties is not deductible for individual investors. However, if your properties are held in a company or trust that carries on a property rental business, the travel may still be deductible.

Note: If you hold multiple properties and manage them actively, you might be eligible to claim travel if your structure qualifies as a rental business — speak to a tax adviser to explore this angle.

5. Administrative and Professional Expenses

Running a portfolio of two or more properties often means more admin, more planning, and more professional help — all of which can be deductible.

Examples include:

• Accounting and tax agent fees

• Legal advice related to tenancy issues

• Landlord insurance premiums

• Subscriptions to property data tools or services used for managing your portfolio

Note: Even a portion of your home internet and phone costs may be deductible if they relate to managing your properties — just keep a log or estimate of usage.

Prepay Expenses for an Immediate Boost

If you have the cash flow and want to bring forward deductions, consider prepaying up to 12 months of expenses before 30 June — like insurance premiums or interest on fixed-rate loans. This can be handy for investors looking to reduce this year’s tax bill.

The ATO allows you to claim a wide range of deductions, but the key is keeping solid records and ensuring the expenses are genuinely related to earning rental income.

If you’ve got two or more investment properties, these deductions can make a serious difference to your bottom line and your long-term wealth.

A good accountant who understands property investing can save you far more than they charge. If you're serious about building wealth through property, make sure your tax strategy is working as hard as your investments are.

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