EOFY 2026: Getting Your Investment Property Ready for Tax Time

Why EOFY matters more than the receipts in your glovebox

The end of the financial year is one of those things that always feels further away than it is — and then it is the third week of June and you are scrambling. With 30 June only days away, a little bit of effort right now can make a real difference to your tax position, and it makes life much easier for your accountant when the return rolls around.

This is a practical, plain-English checklist for Sydney investors. It is general information only — every situation is different, so please confirm the detail with your accountant or registered tax agent before you act. The good news is that none of the negative gearing or capital gains tax changes in the news affect the tax return you are about to do (more on that at the end). For the 2025-26 year, the rules you are working with are the familiar ones.

1. Know what is typically deductible

If your property was genuinely available for rent during the year, a long list of running costs can usually be claimed against your rental income. The common ones the ATO lists include:

• Loan interest on the money you borrowed to buy or improve the property — usually the single biggest deduction
• Property management and agent fees
• Council rates, water rates and land tax
• Strata / body corporate fees (for units and townhouses)
• Landlord insurance and building insurance
• Repairs and maintenance (with an important catch — see below)
• Depreciation on the building and on eligible plant and equipment

A couple of things worth flagging. If part of your loan was used for something private — say you redrew on the investment loan for a holiday or a car — only the portion relating to the property is deductible. And if the property was only rented for part of the year, the claims are scaled back accordingly.

2. Repairs versus improvements — the distinction that trips people up

This is the one I see catch investors out most often, so it is worth getting straight.

A repair fixes wear, damage or deterioration that happened while the property was rented — patching a section of fence, fixing a leaking tap, replacing a few broken roof tiles. Genuine repairs are generally deductible in full in the same year.

An improvement or capital expense goes beyond restoring something to its original condition — it betters the property or its income-earning capacity. Replacing the whole fence rather than a panel, a new kitchen, an extension, or a full renovation all fall here. These are not an immediate deduction; they are typically claimed gradually as capital works (broadly 2.5% a year over 40 years) or depreciated as assets.

One more trap: initial repairs. If you fix a defect that already existed when you bought the place — even if you did not know about it at the time — that generally cannot be claimed as an immediate repair. Your accountant will know how to treat it.

3. Get a depreciation schedule if you do not already have one

Depreciation is the deduction most investors leave on the table, because it does not cost you anything out of pocket each year — it reflects the building and its fixtures wearing out over time.

There are two pieces. Capital works (the structure itself) is generally claimed at around 2.5% a year. Plant and equipment covers removable items like ovens, carpets, blinds and air conditioning. To claim these properly you usually need a tax depreciation schedule prepared by a qualified quantity surveyor — a one-off report that typically pays for itself many times over, and the fee for it is itself deductible.

A heads-up on the rules: since changes that took effect in 2017, if you bought an established (already-built) property after 9 May 2017, you generally cannot depreciate the second-hand plant and equipment that came with it — though brand-new items you install yourself can still qualify, and the capital works (building) deductions are unaffected. It is fiddly, which is exactly why a quantity surveyor and your accountant are worth their fee here.

4. Consider prepaying expenses before 30 June

If you expect a higher income this year than next, bringing forward some deductible costs before 30 June can be worth a conversation with your accountant.

The ATO allows an immediate deduction for a prepaid expense — including interest — where the prepayment covers a period of 12 months or less and that period ends on or before 30 June next year. So prepaying up to a year of interest, or your landlord insurance premium, before 30 June can pull the deduction into this year. Many lenders offer a fixed prepaid-interest option for exactly this; whether it stacks up depends on your rate, your cash flow and your marginal tax rate, so it is not automatically a win.

Just make sure any prepaid work is real and properly documented, not invented to manufacture a deduction.

5. Do not forget borrowing costs

When you set up the loan, the costs of borrowing — things like loan establishment fees, lenders mortgage insurance (LMI), mortgage stamp duty, and a valuation required for the loan — are deductible, but in a particular way. If they total more than $100 they are spread over five years (or the life of the loan, if shorter) rather than claimed all at once. If they come to $100 or less, you can claim the lot in the year you incurred them.

So if you bought or refinanced an investment property in the last few years, there may still be a slice of those borrowing costs to claim this year. It is easy to overlook — worth checking with your accountant.

6. Get your records in order

None of the above is much use without the paperwork to back it up. Before 30 June, it is worth pulling together:

• Your loan statements showing interest paid for the year
• Agent / property manager statements (these usually summarise rent received and fees paid)
• Rates, strata and insurance notices
• Receipts and invoices for any repairs or improvements
• Your depreciation schedule, if you have one

Keep records for the period the ATO requires, and hang on to anything relating to the purchase and any capital improvements — you will need it down the track to work out capital gains tax when you eventually sell. A tidy folder now saves a stressful scramble later.

A quick note on the negative gearing and CGT changes

You have almost certainly seen the headlines, so let me put your mind at ease for this year. The changes to negative gearing and the capital gains tax discount are now law, but they do not start until 1 July 2027 — so they have no effect on your 2025-26 return.

When they do begin, what you already own is largely grandfathered, brand-new builds remain exempt from the negative gearing change, and your own home stays capital-gains-tax-free. There is a clear runway before anything changes, so this is a year to plan ahead calmly rather than react. If you would like to understand how the 2027 rules might affect your strategy, that is a great conversation to have with your accountant — and I am happy to talk through the lending side.

Getting it right

EOFY does not have to be stressful. Know what is deductible, get the repairs-versus-improvements call right, sort a depreciation schedule if you are missing one, weigh up prepaying before 30 June, claim those borrowing costs, and keep good records. Do those few things and you will be in good shape — and your accountant will thank you.

If your property plans involve buying your next investment, refinancing to a sharper rate, or simply getting loan-ready before the new financial year, I am happy to have a free, no-obligation chat. With access to more than 70 lenders, I can quickly tell you where you stand.

This is general information only and not personal financial or tax advice — please speak with your accountant or registered tax agent about your situation, and get in touch if you would like a hand getting loan-ready.

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