EOFY Tax Planning for Investment Property Owners (Australia)

The Australian financial year ends on 30 June. Several tax planning actions relevant to property investors have EOFY deadlines — including prepaying expenses, completing repairs, and ordering depreciation schedules.

This guide covers seven actions that property investors may want to consider before 30 June. Not every action applies to every investor, but the list provides a structured overview of the main EOFY considerations.

1. Prepay up to 12 months of loan interest

Loan interest is typically the single largest deduction for a negatively geared property. Prepaying interest before 30 June brings a future expense into the current financial year, increasing your deductions now.

How it works: Some lenders allow you to prepay up to 12 months of interest in advance. Under ATO rules, you can generally claim an immediate deduction for prepaid expenses under $1,000, or for expenses of $1,000 or more where the eligible service period is 12 months or less and ends in the next income year (ATO — Common property expenses (rental)).

Example: If your monthly interest is $2,200 and you prepay 6 months ($13,200) before 30 June, that entire amount is deductible in the current year. Without prepayment, only the June portion ($2,200) would fall in this year.

What to do:

• Contact your lender to check whether they offer interest prepayment
• Calculate whether the benefit outweighs any administration fees
• Ensure funds are debited before 30 June (allow processing time)

This strategy may be relevant if you expect to be in a lower tax bracket next year, as it shifts deductions into the year where the marginal rate is higher.

2. Bring forward deductible repairs and expenses

Repairs that restore something to its original condition are generally deductible in full in the year they are completed. If you have been deferring maintenance, getting it done before 30 June means the deduction falls into this financial year.

Deductible now (repairs):

• Replacing a broken hot water system with a similar model
• Fixing a leaking roof or tap
• Repainting walls to the same standard after tenant wear
• Replacing damaged carpet with a similar grade

Not immediately deductible (improvements — depreciated over time):

• Upgrading a laminate kitchen to stone benchtops
• Adding a new air conditioning system where none existed
• Renovating a bathroom to a higher standard

The distinction matters because repairs are fully deductible now, while improvements must be depreciated over their effective life. If you are planning any work on your property, doing the repair items before 30 June maximises your deduction in the current year.

Other expenses to prepay before 30 June:

• Landlord insurance premium (renew early for the next 12 months)
• Property management fees (if your manager accepts advance payment)
• Council rates (some councils allow early payment for upcoming quarters)

3. Order a depreciation schedule (if you do not have one)

Investment properties built after 15 September 1987 are generally eligible for Division 43 depreciation. A depreciation schedule is required to claim it.

A depreciation schedule from a qualified quantity surveyor typically identifies $5,000 to $15,000 per year in non-cash deductions, covering both Division 43 (the building structure at 2.5% per year) (ATO — Capital works deductions (Div 43)) and Division 40 (plant and equipment such as carpet, blinds, air conditioning, and hot water systems) (ATO — Depreciating assets in rental properties).

Cost and benefit: A schedule costs $500-$770, which is itself tax deductible. On a property with $8,000/year in depreciation deductions, an investor in the 30% bracket would reduce tax by approximately $2,400/year.

Important for post-May 2017 purchases: If you purchased a second-hand residential property after 9 May 2017, you can generally still claim Division 43 (building structure) depreciation, but Division 40 (plant and equipment) deductions are limited to new items you install yourself. The quantity surveyor will account for this.

Timing: Most quantity surveyors can complete a report within 2-4 weeks. Order by early May to be safe. The deductions apply from the date the property was first used to produce income, not the date of the report, so even a late report can be claimed in the current year’s return.

Read the full depreciation guide

4. Review your loan structure

The structure of your investment loan directly affects your tax deductions. A review before EOFY is worth doing, especially if your circumstances have changed during the year.

Interest-only vs principal-and-interest: Only the interest component of your loan repayment is deductible. Principal repayments reduce your loan balance but provide no tax deduction. During the accumulation phase, many investors choose interest-only loans to maximise deductible interest and minimise after-tax holding cost.

Redraw and offset traps: If you have redrawn from your investment loan for personal expenses (holiday, car, renovations on your own home), the interest on that redrawn amount is generally not deductible. The loan must be apportioned, and only the investment portion remains deductible. This is one of the most common and costly mistakes the ATO identifies in rental property audits.

What to check:

• Has your loan been used for anything other than the investment property?
• Are you paying principal-and-interest when interest-only might be more tax-efficient?
• Has your fixed rate expired, and are you paying a higher variable rate than necessary?
• Could refinancing reduce your interest rate (and therefore your out-of-pocket cost)?

Any change to your loan structure should be discussed with a mortgage broker or financial adviser who understands the tax implications.

5. Check your land tax assessment

Land tax is an annual state tax based on the unimproved value of your investment property land. It is separate from council rates and applies in all states and territories (with different thresholds and rates). Many investors receive their first land tax bill as a surprise because they did not account for it when purchasing.

Why check before EOFY:

• Your state revenue office may have reassessed your land value during the year
• You may be approaching a threshold that triggers a higher marginal rate
• If you own multiple properties in the same state, land values are aggregated — a second property can push you well above the threshold
• Land tax paid is a deductible expense against your rental income

What to do:

• Log into your state revenue office portal and check your current land valuation
• If you disagree with the valuation, most states allow you to object (deadlines vary)
• Factor the land tax amount into your cash flow and negative gearing calculations

Use the land tax calculator to check what you owe (or will owe) across different states.

6. Time your capital gains carefully

If you are considering selling an investment property, the timing of settlement relative to 30 June can make a significant difference to your tax bill. The capital gain is generally assessed in the financial year that settlement occurs, not the date you sign the contract.

Three timing strategies:

Hold for at least 12 months. If you have held the property for 12 months or more at the time of the CGT event, you are generally eligible for the 50% CGT discount (ATO — CGT discount). This means only half the capital gain is added to your taxable income. Selling at 11 months instead of 13 could double your CGT liability.

Defer settlement to the next financial year. If your taxable income is high this year, pushing settlement past 30 June moves the capital gain into the next financial year. This can be beneficial if your income will be lower next year, or if you want more time to arrange offsetting deductions.

Sell in a low-income year. Capital gains are added to your other taxable income and taxed at your marginal rate. If you take a career break, reduce hours, or retire, selling in that lower-income year means the gain is taxed at a lower rate.

Example: An investor selling with a $200,000 capital gain (after the 50% discount, $100,000 assessable gain) who earns $85,000 in salary would pay approximately $30,000-$37,000 in additional tax. The same gain in a year where their salary income is $40,000 would attract significantly less tax because more of the gain falls in lower brackets.

Use the capital gains tax calculator to estimate the impact of different sale prices and timing scenarios.

7. Make a personal deductible super contribution

This is not a property-specific strategy, but it can reduce taxable income before 30 June and may be relevant to property investors.

How it works: You can make personal contributions to your super fund and claim a tax deduction for them. These are called “personal deductible contributions” and they reduce your taxable income dollar-for-dollar, up to the concessional cap.

The cap: The concessional (before-tax) contribution cap for 2025-26 is $30,000 per year (ATO — Contributions caps (super)). This includes your employer’s compulsory super contributions (typically 11.5% of salary). So if your employer contributes $9,775 on an $85,000 salary, you can make a personal deductible contribution of up to $20,225 before hitting the cap.

Carry-forward rule: If you have not used your full concessional cap in previous years (from 2018-19 onwards) and your total super balance is below $500,000, you may be able to contribute more using unused amounts from up to five prior years.

Interaction with negative gearing: A negatively geared property reduces taxable income. A personal deductible super contribution reduces it further.

Example: An investor earning $85,000 with a $15,000 net rental loss (taxable income: $70,000) who makes a $15,000 personal deductible super contribution reduces taxable income to $55,000. The $15,000 contribution is taxed at 15% inside super ($2,250) instead of 30% outside super ($4,500) — a saving of $2,250.

Critical timing: Your super fund must receive the contribution before 30 June, not just your bank. Allow at least 3-5 business days for processing. You must also submit a “Notice of Intent to Claim” form to your super fund and receive an acknowledgement before lodging your tax return.

Putting it all together

The table below estimates the potential annual tax impact of each action for a typical investor earning $85,000 with a negatively geared property in the 30% marginal tax bracket. Your figures will be different.

Not every action is relevant to every investor, and some (like prepaying interest) shift deductions between years rather than creating new ones.

If you want to see how property deductions flow through to your salary during the year, read the PAYG tax table guide and use the weekly tax calculator to model the take-home-pay impact.

Common EOFY issues raised by property investors

Forum threads on Whirlpool, PropertyChat, and Reddit include discussions from investors who were not aware of all available deductions. Common topics include:

• Depreciation awareness. Some investors did not know they could claim building depreciation (Division 43) on properties built after 1987.
• Mixed-use loan issues. Redrawing from an investment loan for personal use changes the deductibility of the interest on that portion.
• Prepayment options. Some lenders offer interest prepayment, but it is not always raised by advisers.
• Sale timing. The financial year in which settlement occurs determines when the capital gain is assessed.

Related calculators

These calculators can model different EOFY scenarios:

• Negative gearing calculator — estimate your net rental loss and tax benefit
• Capital gains tax calculator — model different sale prices and timing
• Land tax calculator — check your liability across states
• Investment property calculator — full picture in one view

The premium property investment spreadsheet integrates negative gearing, CGT, depreciation, land tax, and multi-year cash flow projections in one workbook.

Disclaimer

This guide is general information only and is not tax advice, financial advice, or a recommendation to take any specific action. Tax rules change and your situation is unique. The strategies described may not be suitable or available for your circumstances. Consider speaking with a registered tax agent or accountant for advice specific to you before implementing any tax planning strategy.