You can claim a deduction for your related expenses for the period your property is rented or is available for rent including:

• management and maintenance costs, including interest on loans, can generally be claimed immediately (that is, deducted against your current year’s income).
• borrowing expenses, depreciation and capital works spending can be deducted over a number of years.

You can’t claim:

• expenses not actually paid by you, such as water or electricity charges paid by your tenants
• acquisition and disposal costs, including the purchase cost, conveyancing and advertising costs and stamp duty* on the title transfer – instead, these are usually included in the property’s cost base, which would reduce any capital gains tax when you sell the property
• GST credits for anything you purchase to lease the premises – GST doesn’t apply to residential rental properties. However, when claiming the expense as a deduction, you claim the total amount you’ve paid (inclusive of GST, if applicable).
• Income you must declare

You must include in your tax return the full amount of rent and any other rental-related income you receive (or become entitled to) when you rent out your property – whether paid to you or your agent.
Rental-related income includes:

• rental bond money you become entitled to retain – such as when a tenant defaults on the rent, or damage to your rental property requires repairs or maintenance
• insurance payouts in some circumstances – such as where you receive an insurance payment to compensate for damage to your property or for lost rent
• letting and booking fees you receive
• associated payments you receive, or become entitled to, as part of the normal, repetitive and recurrent activities through which you intend to generate profit from the use of your rental property (if these payments are in the form of goods and services you’ll need to work out their monetary value)
• reimbursement or recoupment for deductible expenditure – for example:
• if you receive an amount from a tenant to cover the cost of repairing damage to your rental property and you can claim a deduction for the cost of the repairs, you need to include the whole amount in your income
• if you receive a government rebate for the purchase of a depreciating asset, such as a solar hot-water system, you may need to include an amount in your income.
• any excessive deductions for capital allowances involving your rental property where a limited recourse debt is terminated without you paying it in full.