Sydney Investment Property Tax Expert

There are significant financial benefits from investing in property in Sydney, not least of which are the reliable capital gains that accrue year in year out.

There is always a risk though that you will be out of pocket if the rental return doesn’t cover the costs of ownership including most importantly interest.

Now of course if your rental receipts are more than your costs – great!  You are “positively geared“!

BUT and this is a big but, often in Sydney, the “rental yield” is lower than the holding cost. The reason for this comes down simply to the fact that the “appreciation yield” is excluded from most rental yield calculations.  In these cases you are “negatively geared“.

The appreciation yield is a result of there being more buyers than sellers thus pushing up the price of the property each year and in Sydney this is a big number.  Why?  Well mainly to do with immigration into the city from other States and overseas.

The problem with the appreciation yield is that it’s only realised when you sell your investment property.  And f course at sale you will have to pay Capital Gains Tax (CGT).

However with clever tax planning, the ATO may help subsidise your holding costs by giving you a tax deduction that can come off other income like your wage or salary, thereby reducing the overall tax that you pay.

It’s important you engage with a professional tax accountant that specialises in investment properly EARLY IN YOUR INVESTMENT JOURNEY.  Or even before you buy that investment property you have your eye on.

Email our property tax expert now at property@rideraccountants.com.au to get started on your investment property journey.

Sydney Property Tax Deductions

Copyright 2023 Rider Accountants & Advisors.  Note well, nothing in this article is to be considered investment advice, it is tax advice in nature only.
Invest in Property Marrickville Sydney and Tax
  • There are significant tax advantages to investing in Sydney Investment property like this new unit development called Wicks Place in Marrickville.
What Sydney Investment Property Purchase Costs are Tax Deductible?

When you first purchase the property, you can claim on your capital account: 

  • stamp duty
  • legal and conveyancing costs
  • stamp duty on transfer
  • real estate agent fees
  • capital improvements
  • borrowing costs (see below)
What Sydney Investment Property Holding Costs are Tax Deductible?

While you own the property you can claim on your income account:

  • council rates
  • interest on loans
  • depreciation on the building
  • depreciation on new fittings and equipment

  • water rates and charges

  • advertising for tenants

  • bank charges

  • body corporate (strata) fees

  • cleaning

  • electricity and gas

  • gardening and lawn mowing

  • insurances including building, contents, public liability, landlords

  • land tax

  • pest control

  • legal expenses

  • lease costs – preparation, registration, stamp duty

  • property agent fees and commission

  • repairs and maintenance

  • accounting, tax and bookkeeping fees

  • security

  • stationery and postage

  • telephone calls and internet usage

  • quantity surveyors report

  • relocation costs for tenants in some special cases

  • prepaid expenses up to 1 year

  • borrowing expenses spread over 5 years including establishment fees, search fees, mortgage legal expenses, mortgage brokers commission, stamp duty on mortgage, lenders mortgage insurance, valuation fee

  • mortgage discharge fees

Note that some expenses that are mainly your purchase costs are required to be capitalised and form part of the cost base for capital gains tax reduction

Most of the holding costs (except improvements) can be claimed in the year they are incurred.