An investment property can build serious wealth, but the tax rules around it are where many investors leave money on the table — or get caught out. Here’s a clear rundown of deductions, negative gearing and the capital gains tax you’ll face when you sell.
What can I claim on an investment property?
- Interest on the loan for the investment portion.
- Council rates, water, land tax and insurance.
- Property management and agent fees.
- Repairs and maintenance (immediately), and improvements (over time).
- Depreciation on the building and fixtures, often via a quantity surveyor’s schedule.
How does negative gearing work?
A property is negatively geared when its deductible costs exceed the rent it earns. The loss can be offset against your other income, such as salary, reducing your overall tax. It’s a cash-flow cost you’re carrying in the hope of capital growth — not free money, so the numbers still have to make sense.
Repairs vs improvements
Fixing something back to its original condition is usually an immediate deduction; upgrading or replacing it wholesale is a capital improvement claimed over time. The distinction trips up many investors.
What about capital gains tax when I sell?
When you sell, you pay capital gains tax (CGT) on the profit. If you’ve held the property for more than 12 months, individuals generally get a 50% CGT discount. Good records of your purchase costs, improvements and selling costs directly reduce the gain — so keep everything.
Frequently Asked Questions
Is interest on an investment property loan deductible?
Yes. Interest on the portion of a loan used to buy or improve an income-producing investment property is generally deductible while the property is rented or genuinely available for rent.
How does negative gearing reduce my tax?
A property is negatively geared when deductible expenses exceed rental income. The resulting loss can be offset against your other income, such as salary, lowering your overall taxable income and tax payable.
Do I pay capital gains tax when I sell an investment property?
Yes. You pay CGT on the profit from selling an investment property. If you’ve owned it for more than 12 months, individuals generally receive a 50% CGT discount on the gain.
Talk to a Melbourne Tax Accountant
TX Accountants And Services (TXAS) helps individuals and businesses across Melbourne stay compliant and pay only what they should. Call (03) 8827 0025, email om@txas.com.au or visit us at 303-313 Burwood Highway, Burwood East VIC 3151.This article is general information only and does not take account of your personal circumstances or constitute tax, financial or legal advice.
中文摘要
投资房税务：可抵扣项目——贷款利息（投资部分）、市政费/水费/土地税/保险、物业管理与中介费、维修（即时抵扣）与改良（分期）、建筑与设施折旧（常用测量师折旧表）。负扣税（negative gearing）：当可抵扣成本超过租金收入形成亏损，可冲抵工资等其他收入以降低总税负——这是为博取资本增值而承担的现金流成本，并非白得，数字仍须合理。维修（恢复原状）通常即时抵扣，改良/整体更换为资本性支出分期抵扣。出售时按利润缴纳资本利得税（CGT），个人持有超过 12 个月一般享 50% 折扣；妥善保存购入成本、改良与出售费用凭证可直接减少应税利得。
