The purchase of an investment property is a popular choice for many Australians looking to build their personal wealth. There are many reasons why investors turn to property; there is less volatility compared to other types of investment, and there is the potential for strong capital growth. Many people are also drawn into property investment by the potential tax benefits. Here is a brief guide to the main tax benefits associated with property investment.

Deductible costs

All the running costs of an investment property may be claimed as tax deductions. Running costs can include expenses such as:

  • Bank charges
  • Body corporate fees
  • Cleaning
  • Council rates
  • Land tax
  • Property management fees and commissions
  • Advertising for tenants

Capital gains tax

This is payable when the capital gains are greater than the capital losses in an income year. The smart option is to coordinate a property asset disposal during the same period as any capital gains.


There are two main forms of depreciation that you can claim at tax time:

  • Capital allowance or building allowance depreciation. In these instances, depreciation values relate to the value of the building itself. Depending on the type of property and when it was built, investors can claim a depreciation value of between 2.5 and 4% per financial year.
  • Depreciating assets. All investors experience this in the form of the depreciation of items contained within the property. These include floor coverings, household electrical appliances such as ovens, dishwashers and cooktops, heating and cooling equipment, blinds and curtains, and hot water systems.

Negative gearing

This is one of the most well-known tax benefits of property investment. Negative gearing is designed to provide some financial relief to investors who own a negatively geared property by allowing them to claim the difference between their income and costs as a tax deduction. This allows them to reduce their overall taxable income. It’s important to know though that this is not the right strategy for everyone.

At Property Equity Builders, we offer positive geared properties. A positive geared property is one which generates more income than is paid out in expenses (before tax savings are taken into account). In the right circumstances, the acquisition of a positive geared property can give an investor a generous passive income – possibly replacing the income they receive from their regular employment, as well as providing additional income during retirement.

The decision to invest in a positive or negative geared property really comes down to individual circumstances and investment goals.

Are you considering property investment?

If you’re looking at property as an investment option, it’s important to talk to someone who can analyse your personal circumstances and come up with a strong plan to put you on the road to financial wealth and freedom.

Property Equity Builders has strong relationships with property developers and builders, which ensures we help match our clients with the right high yield and growth investments. Our team can also provide expert advice on strategies which can assist you to pay your mortgage off sooner, as well as create tax efficiencies to help you build your wealth from year-to-year. To find out how Property Equity Builders can help you reach your financial goals, contact us today.

*This article is for general information purposes only. It is not intended as financial or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser.

PEB Group is a complete property advisory service for Perth families. Offices are located in Inglewood and Willetton, Perth, Western Australia and offer service in - Financial Planning · Finance Broking · Property Management · Property Sales · Property Investment · Development

PEB Real Estate - Licensee PEB Real Estate Pty Ltd. Trading as PEB Real Estate ABN 33 604 199 617. Triennial Number RA70508

PEB Financial Planning - Howarth (WA) Pty Ltd ARN 433328 trading as PEB Financial Planning is a Corporate Authorised Representative of NEO Financial Solutions Pty Ltd. AFSL 385845 | ABN 64 141 607 098

Fungroup Enterprise Pty Ltd | ABN 50 104 943 412 | Australian Credit Licence 389510 | trading as PEB Finance | ABN 50 104 943 142 | Australian Credit Licence 389510