Investment Property Tax Changes You Need to Know in 2025

Tax rules for investment properties continue to evolve. Here's what investors need to know about recent and upcoming changes.

Depreciation Rules Recap

Since 2017, depreciation claims on second-hand properties have been limited:

• Building depreciation (Division 43): Can still claim 2.5% annually on properties built after 1985
• Plant & equipment (Division 40): Can only claim on NEW items you purchase and install, not items already in the property when you buy it

What You CAN Still Claim

Even with the changes, significant deductions remain:

• All loan interest
• Property management fees
• Insurance
• Repairs and maintenance
• Council rates and land tax
• Body corporate fees
• Building depreciation (if built after 1985)
• Any new items you install (air conditioning, appliances, etc.)

Example: Maximizing Deductions

Here's a real example from one of our investor clients:

• Property purchased: $680,000 (built 2001)
• Rental income: $32,000/year
• Loan interest: $28,000/year
• Other expenses: $8,000/year
• Building depreciation: $6,000/year
• Total deductions: $42,000
• Tax loss: $10,000 (reduces taxable income from salary)

Get a Depreciation Schedule

A quantity surveyor can prepare a depreciation schedule showing exactly what you can claim. Cost is typically $500-$700 and is tax-deductible itself.

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