Breaking down the new tax deductibility rules for landlords December 2023

11 Jan 2024 The Lodge Real Estate Team

Property Investment

You’ll remember the previous government stopped landlords being able to deduct the interest costs on their mortgages against their rental income.

Under the new government, landlords will now be able to offset their interest costs against their mortgages, and this will be backdated to 1 April 2023. This is great news for investors.

Here’s what you need to know.

The changes will come in phases. This tax year, investors can claim 60% of their interest costs, 80% the year after, and 100% in 2025/2026.

The magic date to remember is 27 March 2021. If you bought a rental before then, the higher tax rate will phase out for you. But, if you bought after that date, you won’t be able to claim any of your interest when calculating your tax – at least, not for now.

But you will be able to claim some interest from 2024 when deductibility is phased in, and then all of those costs in 2026.

The bottom line is, over time, many investors will pay MUCH less tax. For example, if you owned a rental with a $500,000 mortgage, you could be better off by $115,000 over 15 years under these rules.

Interest deductibility can be tricky to understand. If you have any questions, please give us a call – we’re here to help!

Get the latest listings, market stats, and insights, straight from Jeremy O'Rourke.