Tax Time Tips for Property Investors: Maximising Your 2025–26 Return

Tax season is here, and for property investors, it is one of the most important times of the year. Getting your tax return right can mean the difference between a modest refund and a significant one. Here is what you need to know when lodging your 2025–26 return — and the common mistakes that cost investors money every year.

Key deductions every property investor should claim

As a property investor, you may be eligible to claim a range of deductions against your rental income. These typically include interest on your investment loan, property management fees, council and water rates, insurance premiums, repairs and maintenance costs, advertising for tenants, legal expenses related to the tenancy and travel costs for property inspections (where applicable). Keeping accurate records throughout the year makes claiming these deductions straightforward at tax time.

Depreciation: the deduction many investors miss

Depreciation is one of the most valuable — and most commonly overlooked — deductions available to property investors. It allows you to claim the decline in value of the building structure (capital works deductions) and the fixtures and fittings within the property (plant and equipment). A quantity surveyor can prepare a depreciation schedule that typically costs a few hundred dollars but can unlock thousands of dollars in deductions each year, particularly for newer properties.

Repairs vs improvements: know the difference

The ATO draws a clear distinction between repairs (which are immediately deductible) and improvements (which must be depreciated over time). Replacing a broken window with a like-for-like replacement is a repair. Upgrading a single-glazed window to double-glazed is an improvement. Getting this classification wrong is one of the most common mistakes investors make, and it can trigger an ATO review. When in doubt, ask your accountant.

Interest deductions and loan structuring

The interest on your investment loan is typically your largest deduction. However, the ATO requires that the loan funds be used for investment purposes to claim the interest. If you have refinanced and drawn additional funds for personal use, only the portion of interest attributable to the investment is deductible. This is why proper loan structuring — keeping investment and personal borrowing separate — is so important. Your mortgage broker can help ensure your loan structure supports maximum tax efficiency.

Prepaying expenses before 30 June

While the 2025–26 financial year has now closed, it is worth noting for future planning that prepaying certain expenses before 30 June can bring deductions forward into the current financial year. Common prepayments include interest on investment loans (up to 12 months in advance), insurance premiums and property management fees. This strategy can be particularly effective in years where your taxable income is higher than usual.

Record keeping: the foundation of a strong return

The ATO requires you to keep records for five years from the date you lodge your return. Use a dedicated system — whether it is a spreadsheet, accounting software or a folder of receipts — to track all income and expenses related to your investment property throughout the year. Good records not only make tax time easier but also protect you in the event of an audit.

Common mistakes that cost investors money

The most common mistakes we see include: not getting a depreciation schedule, incorrectly classifying improvements as repairs, failing to apportion expenses when a property is not rented for the full year, claiming personal expenses against the investment property and not keeping adequate records. Each of these can result in either missed deductions or ATO penalties. A property-savvy accountant is worth their weight in gold.

How your mortgage broker can help

While your accountant handles the tax return, your mortgage broker plays an important role in ensuring your loan structure supports your tax position. If your current structure is not optimised — for example, if investment and personal borrowing are mixed — a refinance or restructure could improve both your cash flow and your tax outcome. At New Vision Financial Services, we work alongside your accountant to ensure your finance structure is working as hard as possible for you.