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.
See also: