Some legal expenses incurred in producing your rental income are deductible. These include the costs of:
- evicting a non-paying tenant
- taking court action for loss of rental income
- defending damages claims for injuries suffered by a third party on your rental property.
Most legal expenses, however, are of a capital nature and are therefore not deductible. These include costs of:
- purchasing or selling your property
- resisting land resumption
- defending your title to the property.
For more information, see Expenses you can claim.
Non-deductible legal expenses which are capital in nature may, however, form part of the cost base of your property for capital gains tax purposes.
For more information, see Capital gains tax and Guide to capital gains tax.