How do I claim rental property deductions on my tax return?

Under ITAA 1997 s8-1, expenses incurred in earning rental income are deductible. The major categories: mortgage interest (deductible), council rates + water + land tax (deductible), insurance (building, landlord, public liability, deductible), management + advertising fees (deductible), repairs vs improvements (repairs deductible same year; improvements depreciate via Div 43 over 40 years).

Plant + equipment depreciation under Div 40 (carpets, blinds, appliances, hot water systems), diminishing-value or prime-cost method, with the May 2017 restriction limiting Div 40 on second-hand residential to items the new owner buys/installs themselves.

Capital works under Div 43, 2.5% of construction cost, 40 years straight-line. Available on residential post-1987-built and commercial post-1985-built. A QS report typically captures both Div 40 + Div 43 in one document.

Records: keep receipts + invoices for 5 years post-return (longer if claiming depreciation, since the QS-report cost-base persists across years). The ATO randomly audits ~3-5% of investor returns each year; the audit prompt is usually disproportionate-loss claims.