Preparing an investment property tax return in Australia requires careful record-keeping and a thorough understanding of which expenses are deductible, how depreciation works, and how rental income is assessed. In 2026, the ATO pre-fills much of your rental income data through the Sharing Economy Reporting Regime and data-matching programs — making accuracy in your deduction claims more important than ever. Here is how to prepare your investment property tax return correctly.

What Income Must You Declare?

  • All rental income received during the year (including advance rent and bond kept for damages)
  • Lump sum payments from breaking a lease
  • Insurance payouts for lost rent
  • Income from holiday letting or short-term rental platforms (Airbnb, Stayz)

If your property was rented for only part of the year, you can only claim deductions for the period it was rented or genuinely available for rent.

Key Deductions to Include

  • Interest on investment loan — the largest deduction for most investors
  • Property management and letting fees — agent fees (7-10% of rent), advertising, letting fees
  • Council rates, water rates, and land tax
  • Building insurance and landlord insurance
  • Repairs and maintenance (not improvements)
  • Depreciation — from a quantity surveyor's schedule (Division 43 and Division 40)
  • Body corporate fees (for strata/apartments)
  • Accounting fees for preparing the rental schedule

Preparing the Rental Property Schedule

Your investment property information is reported on the "Rental property" schedule attached to your individual tax return. For each property, you must separately disclose: address, ownership percentage, rental income, each category of deduction, and net rental income or loss. If you jointly own the property, each owner reports their proportional share — you cannot split the income or expenses differently from the ownership ratio (unless it is a partnership with a different agreement).

Mixed Use: Personal and Rental Use

If you use the property personally for some periods and rent it for others (a holiday house or beach house), deductions must be apportioned based on the rental-use percentage. If the property is rented below market value (e.g., to family members), deductions are limited to the amount of income received — you cannot create a net loss from below-market rentals.

CGT Records: Keep From Day One

Every document relating to the purchase, improvement, and eventual sale of your investment property is a CGT record. The ATO requires these to be kept for 5 years after the year of sale. Start a CGT records file from the date of purchase including: contract of sale, conveyancing invoices, all improvement receipts (renovation invoices), and depreciation schedules.

Frequently Asked Questions

What records do I need for an investment property tax return?

You need: rental statements from your property manager (or own records if self-managed), loan statements showing interest paid, rates notices, insurance invoices, repair receipts, body corporate statements, depreciation schedule, and any purchase or improvement invoices for CGT purposes. Keep all records for 5 years after the relevant year's lodgement.

Can I claim a deduction if my property was vacant?

Yes, if the property was genuinely available for rent during the vacancy (advertised at market rent). You cannot claim deductions for periods when the property was not available, was held for personal use, or was offered at below-market rent.

Does my property manager provide what I need for tax?

Most property managers provide an annual income and expenditure statement summarising rent collected and management fees. You still need to separately track interest on your loan, council rates, insurance, and repairs. Your accountant can compile the full rental schedule from these sources.

Own a rental property and need help with your return? Contact AWTS — we prepare investment property tax returns for clients across Australia.