Owning and renting a property
Our Rental properties guide 2026 will help you, as an owner of rental property in Australia, work out what:
- rental income is assessable
- expenses are allowable deductions
- records you need to keep
- you need to know when you sell your rental property.
Many, but not all, of the expenses associated with rental properties are deductible. This guide explains:
- how to apportion your expenses, if only part of the expense is deductible
- what expenses aren't deductible
- when you can claim those expenses that are deductible
- some you can claim in the tax return for the income year in which you spent the money
- others must be claimed over several years (including decline in value of depreciating assets and capital works expenses).
When you own a rental property, you may also need to know about:
- capital gains tax (CGT)
- general value shifting regime
- goods and services tax (GST)
- negative gearing
- pay as you go (PAYG) instalments.
Natural disasters and hardship
We have special arrangements if you're affected by natural disasters such as a cyclone, flood or fire occurring during the income year. For more information on help in natural disasters or if you're experiencing financial hardship, see Support in difficult times.
If your records are lost or destroyed, we can help you to reconstruct your tax records, and make reasonable estimates where necessary.
We can also help you by:
- fast tracking refunds
- giving you extra time to pay debts, without interest charges
- giving you more time to meet activity statement, income tax and other lodgment obligations, without penalties.
Granny flat arrangements and capital gains tax
A granny flat arrangement is a written agreement that gives an eligible person the right to occupy a property for life.
A granny flat arrangement is exempt from CGT if:
- the owner or owners of the property are individuals
- one or more eligible people have an eligible granny flat interest in the property
- the owners and the people with the granny flat interest enter into a written and binding granny flat arrangement. This arrangement must not be commercial in nature.
Other CGT events that aren't related to a granny flat arrangement, or sit outside the arrangement, are subject to normal CGT rules. For example, the sale of a property that was used in a granny flat arrangement, which has since terminated, is subject to the normal CGT rules.
Holiday homes
If you use your holiday home as a rental property as well, you can't claim deductions for the ownership and use of it unless it is mainly used (or held for use) to produce rent.
Ownership and use expenses include interest on borrowings to finance the property, council rates, land tax and repairs and maintenance expenses.
Regardless of whether you can or can't claim a deduction for your ownership and use expenses, you can claim a deduction of any expenses related solely to earning rental income from the property. For example, the cost of listing the property on an accommodation platform, management fees and cleaning costs incurred after a tenant vacates will be deductible.
For more information on when holiday home expenses are deductible, the deductions you can claim and when it isn't used or held for use mainly to produce assessable income, see:
- Ownership and use expenses for your holiday home
- Holiday homes
- Taxation Ruling TR 2026/1: Income tax: rental property income and deductions for individuals who are not in business
- Practical Compliance Guideline PCG 2026/3 Application of section 26-50 of the Income Tax Assessment Act 1997 to holiday homes that you also rent out - ATO compliance approach.
Is your rental property outside Australia?
If your property is located outside Australia, special rules apply to the deductibility of your rental property expenses.
For more information on foreign source income, see question 20 in the individual tax return instructions. If you're unsure of your obligations, contact your recognised tax adviser or us.
Continue to: What's new in the rental properties guide?
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