Becoming a landlord is an exciting step — but it also comes with a fair share of responsibilities, especially when it comes to managing your finances and staying on top of what you can (and can’t) claim as a tax deduction.
One common question for first-time investors is:
“Can I claim expenses I’ve incurred before the property is officially available for rent?”
The short answer is: yes, in some cases — but not all.
This guide will walk you through what you need to know about pre-rental expenses, what’s claimable, what’s not, and how to stay compliant with the ATO’s expectations.
What Does “Available for Rent” Actually Mean?
Before claiming expenses prior to property being genuinely available for rent, the Australian Taxation Office (ATO) requires clear evidence that the property is truly on the rental market. In other words, it must meet certain criteria that demonstrate you’re actively trying to rent it out. This includes:
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The property is advertised in a way that shows you’re actively seeking tenants (e.g. online listings, real estate signage).
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It’s in a condition that tenants could reasonably move in to.
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The rent set is in line with market rates.
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You’re not placing unreasonable restrictions on who can apply.
In short, the ATO looks at whether a genuine effort is being made to rent the property.
Can You Claim Costs Before It’s Officially Rented?
Yes — if the property is genuinely available for rent, you can claim certain expenses incurred before a tenant moves in. However, the timing and purpose of the expense are key.
Claimable Pre-Rental Expenses
Here are some common costs that are typically tax-deductible once the property is genuinely available for rent:
1. Advertising for Tenants
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Costs of online listings, signage, and marketing materials.
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These are direct efforts to lease the property and are fully deductible.
2. Loan Interest
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If you’ve taken out a mortgage on the property, the interest portion of your loan repayments is deductible once the property is available for rent.
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Keep in mind: you can’t claim the principal portion.
3. Council Rates, Water Rates & Land Tax
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These ongoing holding costs are deductible from the time the property becomes available for rent — even if it’s vacant.
4. Repairs & Maintenance (if they relate to rental use)
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If you’re fixing something to make the property rentable (e.g., repairing broken windows, cleaning carpets), those costs may be deductible.
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However, initial improvements or renovations (more on that below) are treated differently.
5. Property Management Fees
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If you engage a property manager to find tenants or manage the property, their fees can be claimed once the rental process begins.
6. Travel Expenses (limited)
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While travel deductions have been largely scrapped for residential landlords, some expenses related to property inspections before leasing may be claimable under specific circumstances — always check with your accountant.
Non-Claimable Expenses (Capital or Private in Nature)
Some expenses cannot be claimed right away and may instead be treated as capital costs or added to your property’s cost base for capital gains tax purposes later on.
🚫 Initial Repairs or Improvements
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Work done to improve the property or fix issues that existed at the time of purchase (e.g., renovating a kitchen, replacing the roof) is not immediately deductible.
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These are considered capital works and may be depreciated over time.
🚫 Stamp Duty & Legal Fees on Purchase
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These are part of your property’s acquisition cost and can’t be deducted as rental expenses.
🚫 Loan Establishment Fees
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These costs are also capital in nature but may be deductible over the life of the loan, depending on your lender’s structure.
Example: Sarah’s First Investment Property
Let’s say Sarah buys a rental property in Toowoomba in March 2025. She spends April cleaning the property, getting some minor repairs done, and starts advertising it for lease on toowoombahomestays.com.au in early May.
Here’s what Sarah can claim:
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Interest on her mortgage from when she began advertising (early May)
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Advertising costs from toowoombahomestays.com.au
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Council rates and water rates from May onward
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Repair costs to fix damaged fixtures (not renovations)
She cannot claim:
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Costs of painting the entire house to improve its look
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Stamp duty on the property
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Costs incurred before the property was genuinely made available for rent
Pro Tips for New Landlords
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Document everything: Keep clear records and dates of when the property became available for rent.
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Get professional advice: Every situation is different. A property-savvy accountant can help you structure your claims correctly.
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Separate personal use: If you live in the property at any point, that portion of expenses is not deductible.
Final Thoughts
Getting your property ready for rent can be costly, but understanding what you can claim — and when — makes a big difference at tax time. If your property is genuinely available for rent, you may be eligible to deduct many of the costs incurred just before your first tenant moves in.
Still unsure about your situation? Speak with a qualified accountant or property advisor to ensure you’re maximising your deductions while staying ATO-compliant.