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This guide is designed to help you understand the tax implications of owning a rental property, including income, expenses, co-ownership, and capital gains tax.

Rental Property Income

Rental income is the total amount of rent and associated payments you receive from your rental property. This includes:

  • Rent payments

  • Reimbursements for expenses

  • Payments in goods and services

  • Insurance payouts replacing lost rent

  • Booking or letting fees

✅ Example: If you receive $1,500 in rent and $100 for a repair reimbursement, your total rental income is $1,600.

Rental Property Expenses

You can claim deductions for expenses related to your rental property, such as:

  • Interest on loans used to purchase rental property.

  • Repairs and maintenance.

  • Claim depreciation on assets like furniture and fixtures.

  • Advertising for tenants.

  • Property agent fees.

  • Interest on loans.

  • Council rates.

✅ Example: If you spend $500 on advertising, $200 on agent fees, and $300 on repairs, your total deductible expenses are $1,000.

Expense Type


Interest on Loans

Loans used for rental property

Repairs and Maintenance

Immediate deductions


Furniture, fixtures, etc.

Interest Expenses

You can claim a deduction for interest on loans used to purchase, build, or improve the rental property. However, the interest must relate to the co-owner's share in the property.

✅ Example: If only one co-owner borrows money to buy their share of the property, only that co-owner can claim the interest deduction.

Example: Investment Property Expenses

Scenario: Emma owns a rental property and incurred the following expenses:

  • Interest on Loans: $8,000

  • Repairs and Maintenance: $2,000

  • Depreciation: $1,500

Co-Ownership of Rental Property

Rental income and expenses must be divided between co-owners according to their legal interest in the property, despite any agreement stating otherwise.

Joint Tenants

  • Each owner holds an equal interest.

  • On the death of one owner, the property passes to the surviving owner(s).
    ✅ Example: Mr. and Mrs. Hitchmann own a property as joint tenants. Each must report 50% of the rental income and expenses.

Tenants in Common

  • Owners may hold unequal interests.

  • Each owner's share of the property is specified in the title deed.
    ✅ Example: If Mr. and Mrs. Hitchmann own a property as tenants in common with shares of 75% and 25% respectively, Mrs. Hitchmann reports 75% of the income and expenses, while Mr. Hitchmann reports 25%.

Co-Owners Not in Business

  • Co-owners are typically investors, not carrying on a business.

  • Each co-owner reports income and expenses based on their legal interest.

  • Each must report 50% of the income and expenses.
    ✅ Example: The Tobins own two units and a house as joint tenants and are not in business.

Reporting Deductions 

Expense Type


Interest on Loans


Repairs and Maintenance




Total Deductions