Everyone knows purchasing and owning a rental property is an exciting time. Before you get started, you need to know a few tax tips for owning a rental property. Regardless of whether you use a tax return accountant to do your tax returns or do it yourself, the best thing you must know to make your tax season stress-free is to maintain good business records. You’ll wish to maintain business records for the time you own the property and for 5 years after you sell the property. In today’s blog, we’ll discuss a few things when it comes to owning a rental property. Let’s get started:

Types of Records that You Need to Keep

The following are some records that you are required to maintain:

  • Contract of purchase and sale
  • Proof of all income and expenses (e.g. a statement that is given by the real estate agent)
  • Any periods of personal use by you, your family, or friends
  • Any loan and refinancing documents, including previous ones
  • Proof of steps you’ve taken to rent out the property, such as where you advertised, queries/inquiries you received and responded to, and modifications to rental rates

Maintaining accurate business records helps you declare your all income and claim everything you are eligible for. In addition to this, when you sell, capital gains tax may apply, and good business records will make sure you pay the right amount of tax.

Declare All Rental Income

You need to declare all income you get by renting out your property, whether it is paid to you or your real estate agent. Examples of rental income for both long-term and short terms include:

  • Received rent (it could be either monetary or in the form of goods and services), before any fees or expenses
  • Insurance payouts, such as payouts for damage caused by tenants or compensation for loss of rent
  • Letting or booking fees received
  • Amounts/fees retained from cancelled bookings
  • Reimbursement for deductible expenses, such as government rebates for a solar hot water system.

In addition to this, another type of income that people most often forget to include is from sharing accommodation sites. Therefore, if you rent a room in your home or your entire home when you are away, this is also considered income, and you are required to declare it.

Claim the Rental Expenses You are Eligible for

Various expenses are related to your rental property that will be deductible, but not all of them. Furthermore, if you keep accurate records, then you can claim correctly when it’s tax season. Three types of rental expenses:

  • Expenses that you can claim as an immediate deduction in your tax return, can include:
    • interest on your loan
    • property management fees
    • repairs and maintenance
  • Expenses that you can claim over a number of tax returns, examples include:
    • borrowing expenses
    • capital works or improvements
    • depreciating assets
  • Expenses that you can’t claim as a deduction, include:
    • travel to inspect the property
    • buying or selling costs
    • expenses incurred during periods of personal use of the property

While you are not allowed to claim a deduction for expenditures associated with purchasing and selling your rental property, these will create a part of your capital gains tax calculation.


You can follow the aforementioned tax tips when deciding to own a rental property. Moreover, for further information, you can also get in touch with Reliable Melbourne Accountants.

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