Landlords in WA should concentrate on accurately reporting income and carefully classifying costs for the 2025 tax year. Ordinary rental expenses (interest, council rates, insurance, property management fees, repairs, and some travel/vehicle/working-from-home items where applicable) can be deducted by the Australian Taxation Office (ATO). However, private or capital expenses cannot be claimed, and repairs and capital improvements must be adequately separated. Plant and equipment items are claimed under Division 40, and capital works (building construction and structural improvements) are claimed under Division 43. Both have stringent regulations and paperwork requirements.

For Perth investors, state levies (such as those for foreign or absentee owners) and WA land tax continue to be significant factors. Maintain accurate records, hire a reputable property manager (such as Bargoti Real Estate) to assist with scheduling rent, maintenance, logbooks, and paperwork, and rely on a certified quantity surveyor for depreciation schedules as necessary. (WA Treasury: land tax; key ATO guidance: capital works, depreciation, and rental expenses.)

Why this guide — and why 2025 matters for WA landlords

1. The ATO’s Rental Properties Guide and accompanying materials were modified for 2025, strengthening previous clarifications regarding repairs vs. upgrades, depreciation timing, and record-keeping standards. While tax time seems like an annual obstacle, 2025 provides a mix of familiar laws and a few new quirks.

2. At the same time, Perth landlords’ net returns and, consequently, their tax results are impacted by WA-specific expenses such as land tax thresholds, surcharge regulations for absentee or foreign owners, and local market fluctuations (vacancy, rents, and policy changes).  

3. This book discusses what is and is not claimable, breaks down the practical tax positions landlords need to know for the 2024–2025 income year (tax returns filed in 2025), and provides checklists and examples tailored to Perth that you can use right away.

How to use this guide

• Read the sections that match your situation (buy-to-let owner-occupier, investor with renovations, recently sold property, foreign/absentee owner).
• Save or print the checklists and examples to give to your accountant or property manager.
• Treat the ATO links cited here as primary source documents — this guide interprets them for Perth landlords but does not replace professional tax advice.

What you can claim (the core deductible items)

As long as the property is available for rent throughout the claimed periods, the ATO allows you to deduct costs incurred in generating rental income. These are the typical categories found on a landlord’s return from Perth, along with helpful advice for WA owners.

1. Interest on loans (mortgage interest)

• What: Generally speaking, interest paid on loans used to buy or renovate rental property is deductible. Principal repayments are not deductible; only the interest portion is.
• Practical WA note: Carefully allocate interest if you have several loans or redraws with a mix of personal and investment uses (maintain loan statements). If a portion of the loan was used to cover private expenses, the ATO will require a detailed explanation of how interest is allocated.

2. Council rates, water rates, and strata fees

• What: Deductible during the time that the land was actually for rent or rented.
• Perth nuance: Water rates in Western Australia may be account-based or seasonal; notice vacant times and retain invoices (rates are apportioned).

3. Landlord insurance and building/contents insurance

• What: Insurance premiums for rental property coverage are deductible.
• Tip: Keep a copy of all policies and payment receipts. If the landlord covered the cost of the tenants’ insurance or contents coverage, classify it as an owner benefit.

4. Property management and agent fees

• What: Management fees, let-only fees, and advertising for tenants are deductible.
• Bargoti Real Estate context: A professional manager who keeps detailed records makes tax time simpler — all management invoices, tenant ledgers, and repair invoices support deductions.

5. Repairs and maintenance (routine repairs)

• What: In the year that they are incurred, repairs to address wear and tear or damage (such as replacing broken windows or fixing a leaking tap) are deductible.
• The main takeaway is that repairs that return an item to its pre-damage state—not enhancements that raise the asset’s value—are deductible. Pre- and post-repair images, quotes, and invoices should be documented because this is one of the most frequent ATO audit concerns.

6. Capital works deductions (Division 43)

• What: Statutory rates (usually 2.5% or 4%, depending on the date and kind of construction) can be used to recover construction costs, structural upgrades, and fixed building items (concrete slabs, brickwork, plastering). These are years’ worth of capital deductions.
• Practical: Contracts and builders’ invoices are proof of construction costs. If you built or refurbished, save the builder’s paperwork and use a quantity surveyor to determine the amounts of acceptable capital works.

7. Council and state taxes are directly related to the rental

• What: During the rental period, some property-related local or state taxes that are not income taxes are deductible.
• Is the land tax itself not deductible as a capital or owner tax against rental income?
• Note: investment properties typically qualify for land tax deductions; see WA specifics below.

8. Body corporate fees

What: Investment flat strata levies are deductible.  

Certain lump sums for capital projects by body corporates could have capital or designated components (see an accountant).

9. The landlord pays utilities for the rental

What: Utilities are claimable if you pay for them (water for common areas if the owner pays, electricity between tenancies).

10. Legal and professional fees

• What: Tax advice fees, rental schedule preparation fees, and tenancy dispute resolution fees associated with rental activities are deductible.
• Since they are included in the cost base for CGT, capital legal expenses incurred during the purchase or sale of a property are not deductible.

What you can’t claim (common traps and definite no-nos)

Understanding the boundaries prevents expensive adjustments later.

1. Private or individual costs

You cannot deduct any expenses related to private use, such as your phone or the portion of your mortgage that you use for your own house.

2. Improvements and capital costs (described as repairs)

• Major modifications or renovations, such as adding a deck, building an addition to the house, or replacing the entire roof, are capital in nature.  
• They are either claimed as capital works (Division 43) over time or as part of the capital cost base, but they are not deductible as repairs in the year of expenditure.  
• One common audit trigger is misclassifying items as urgent deductions.

3. Stamp duty and acquisition costs (up-front costs)

Stamp duty, transfer fees, and acquisition-related legal expenses are included in the capital cost base that is used to calculate capital gains upon sale and are not immediately deductible.

4. Private use items

You must only apportion and claim the portion of an item that generates income if it is utilised partially for private purposes (for example, the owner uses a “rental” property for holidays for a portion of the year).

5. Excessive or unsupported claims

ATO attention is likely to be drawn to large or irrational deductions that lack receipts or independent confirmation (such as bank records or invoices).

Selling your rental: Capital Gains Tax (CGT) basics for WA landlords

CGT is taken into account when selling an investment property.

1. CGT in brief

• Sale revenues less cost base (buy price + acquisition costs, capital upgrades, and other permitted additions) less any capital losses is the taxable event.
• 50% CGT discount: This is the typical discount for people and some trusts, and it may be available to you if you are an Australian resident and have owned the property for at least a year.

2. Key sale-time items to track

• Stamp duty and the purchase price are included in the cost base.
• Agent commissions on sales and legal fees are added to the cost base.
• Keep invoices for capital improvements (big renovations) so you may include them in your cost base.
• Depreciation already claimed: Keep in mind that depreciation deductions lower your cost base for CGT (via capital allowance adjustments); this is important for calculating capital gains, mainly if you sell.  
• The cost base should be modified appropriately by your accountant.
• The primary residence exemption and partial exemptions can be applicable if you turned your Perth house into an investment property (or vice versa); time and record-keeping are crucial.

WA-specific taxes and charges to factor in (land tax, surcharges, stamp duty)

Perth landlords are subject to both state and federal income tax regulations. The WA landscape in 2025 looks like this:

1. Land tax (Western Australia)

• The principal place of residence, or your home, is usually exempt from the annual state tax known as land tax, which is levied at midnight on June 30 on the unimproved value of all land you own above a certain threshold.
• The Department of the Treasury maintains the information, and WA’s administration and thresholds were updated.
• Why it matters to landlords: Land tax affects the continuing holding cost and is usually deductible for land that generates revenue (investment property).
• Before completing tax returns or estimations, visit the WA Treasury page as WA routinely adjusts thresholds and exemptions.

2. Absentee owner surcharges & foreign buyer surcharges.

• Foreign buyers or absentee owners may be subject to additional levies and customs.  
• WA has its arrangements and effective dates to keep an eye on. These are state-based, and rates and criteria have changed recently in some areas.  
• The surcharge and related compliance (as well as any potential discrepancies in stamp duty) are significant to net returns if you are an absentee owner or a foreign national.

3. Stamp duty/transfer duty

• A one-time, non-deductible state tax at the time of purchase that is included in the asset cost base for CGT upon sale.
• When making a purchase, check the Treasury webpage or the state calculator for WA’s fluctuating transfer duty rates and discounts.
• Verify the land tax assessment year and save the notices for accounting and tax returns.
• WA land tax notices arrive from October to January.  
• Land tax is assessed on combined holdings if properties are held in trust structures or by numerous owners; structure planning influences liability to land tax.

Record keeping: what the ATO wants to see (and what Bargoti Real Estate can help collect)

Good records make tax time easier and reduce audit risk. For each rental property and tax year, keep:

• Tenancy agreements, rent ledgers and bank receipts.
• Bank statements showing rental income deposits and loan interest.
• Invoices and receipts for repairs, maintenance, renovations, property management fees, insurance, council rates, strata levies, and utilities paid by the owner.
• Contracts, builder’s invoices, and valuation documentation for capital works.
• Depreciation schedules or quantity surveyor reports.
• Correspondence with tenants regarding repairs and access.
• Records of the period’s property were available for rent (advertising, agent notes).
• Photos (before/after) for repairs vs improvements.
• Land tax notices and stamp duty documents.

Why this matters: The ATO expects contemporaneous records. Incomplete files often lead to denied deductions and interest/penalties.

Practical tax-time checklist for WA landlords (actionable)

Prepare to file your 2025 return by using this checklist:

1. Before you see an accountant

• Gather rent ledger (Bargoti or your agent can supply).
• Collate bank statements showing rent received, loan interest charged, and principal payments.
• Collect invoices/receipts for repairs, maintenance, property management fees, advertising, council rates, strata levies, and insurance.
• Have land tax notices and transfer duty documents ready.
• If you claimed depreciation previously, bring the previous years’ schedules.
• If you renovated or built, collate contracts, builder invoices and any certificates.
• Photographs of work (before/after) — particularly for repairs vs improvements.
• If sold during the year, supply contract of sale and settlement statements (stamp duty, selling agent invoices).

2. With your accountant

• Confirm interest apportionment for any mixed-purpose loans.
• Check the correct treatment for any major renovations (capital works vs repairs).
• Ask whether a quantity surveyor’s report would increase deductions (often beneficial for new builds or substantial renovations).
• Confirm any land tax implications and WA-specific surcharges for your ownership structure.

Common myths and clarifications

Myth 1 — “I can claim to travel to my rental property for inspections.“

Travel claims for residential rental properties have been heavily scrutinised and often disallowed; treat travel claims cautiously and document the purpose and necessity.

Myth 2 — “If I renovate, it’s all deductible.“

Renovations are capital unless they’re repairs restoring the original condition. Proper classification matters — and upgrades are often capitalised and claimed as capital works over time.

Myth 3 — “Buying through a company avoids land tax.“

Ownership structure affects land tax and income tax treatment; planning needs to consider WA’s land tax regime and potential surcharges. Always take specialist advice — changes to ownership, trusts and companies have tax and land tax implications.

Strategies to legally reduce tax payable (not tax avoidance)

The following are common, legal tactics used by landlords; always follow professional counsel.

• Make sure you include all of the permitted costs (maintenance, insurance, and agency fees).  
• An active property manager and a well-organised record system are helpful.
• A professional depreciation schedule can accurately allocate capital works claims (Division 40 and 43) and discover plant and equipment that you might have overlooked.  
• This can significantly lower taxable income, particularly for freshly remodelled or newer buildings.
• The tax implications of owning property in people, corporations, or trusts vary (income tax, land tax, capital gains).  
• A customised structure is essential, but don’t just focus on tax advantages; also take asset protection, estate planning, lending, and land tax into account.
• You can occasionally maximise the timing of income recognition or deductible expenses with guidance (for example, paying deductible costs in advance before June 30 to receive a deduction for the year); nevertheless, be cautious of anti-avoidance regulations and make sure that the transactions are legitimate.

Recent ATO focus areas & changes (2024–2025 updates)

The ATO has updated its guidelines regarding rental properties and highlighted specific risk areas for the 2024–2025 term.

• The 2024 and 2025 rental properties guides were released or revised, and they consolidated the treatment of numerous rental-related claims (capital works, depreciation, and deductions).  
• For landlords, these are the primary ATO references.
• ATO guidance has been revised to clarify when buyers can claim additional assets after significant renovations or development.
• Keep good records and take a cautious approach to new claims.
• The media and ATO announcements indicate heightened scrutiny on rental claims (interest allocation, repairs vs. upgrades, and depreciation).

Frequently asked questions (Perth landlords)

Q: Is land tax deductible against rental income?

Yes, land tax that relates to investment land is generally deductible as an expense for income-producing property. Check WA notices for how land tax is assessed and apportioned across owners if necessary.

Q: Can I claim depreciation for a carpet I replaced last year?

Yes, replacing a carpet is generally the decline in value of a depreciating asset (Division 40) — how you claim depends on whether it’s new or replaced and prior depreciation claims. Use a quantity surveyor or accountant to be sure.

Q: I live interstate — do I face absentee owner surcharges?

WA has rules for land tax and potential surcharges for absentee owners; check WA Treasury guidance and speak to your tax adviser about residency and surcharge definitions.

Q: I rented my house out for 3 months and lived there the rest of the year — can I claim expenses?

You must apportion expenses between private and income-producing use (time-based apportionment is typical), and only claim the rental period proportion. Keep tenancy agreements and evidence.

Final practical tips (the Perth landlord survival kit for tax time)

• Start early. Compile your income/expense evidence now — don’t wait for your accountant.
• Get a tax pack from your property manager. Ask Bargoti Real Estate (or your manager) for an annual tax pack with statements and repair logs.
• Be conservative and document everything. Under-claiming legitimately is better than overclaiming and facing an ATO adjustment.
• Use specialists for complex matters. Quantity surveyors for depreciation, tax lawyers for structure, and experienced accountants for CGT and land tax planning.
• Stay up-to-date. ATO and WA Treasury rules update — check the primary pages before lodging.

Conclusion — Keep the tax pain small and the returns real

There’s no need to rush through tax season. Proper record-keeping, separating repairs from capital improvements, using depreciation wisely, and being aware of WA-specific fees like land tax and other surcharges are crucial for landlords in the state. You may maximise your allowable deductions and maintain compliance by working with a qualified tax advisor in addition to a professional property manager like Bargoti Real Estate, who can provide the necessary paperwork and assist in managing the property lifecycle.

DISCLAIMER – The information and opinion provided is for guidance and general informational purposes only. The sole intention is to provide general understanding of the subject matter so the readers can assess whether they need more detailed information. The information provided on this website should not be regarded as a financial, business, legal or real estate advice and it is strongly recommended that the readers should seek their own independent financial, business, legal or real estate advice. While every effort has been made to ensure that the information and the material is correct and up to date at the date of publication. However, we do not guarantee or warrant the accuracy or completeness of the information provided as the factors like changes in circumstances after the time of publication, may impact such accuracy or completeness. Bargoti real estate will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.