Rental income is considered taxable income in Australia, and Victoria follows the national tax guidelines. This means any profit you make from renting out a property – after deducting allowable expenses – is subject to income tax.
As of December 2025, the Australian Taxation Office (ATO) requires landlords to declare rental income annually. Allowable deductions currently in Melbourne include property management fees (typically 1.5-2.5% of the weekly rent), rates, insurance, repairs, and depreciation on the building and its fixtures. It’s important to note that borrowing costs, like mortgage interest, are generally not deductible, though there are exceptions. Many investors engage a qualified accountant to maximise legitimate deductions. In the Eastern Suburbs, where properties often attract higher rents, careful record-keeping is crucial. We often see clients preparing to sell investment properties in 2026 proactively review their tax position with an accountant to understand the implications of the sale on capital gains tax. The ATO’s rules around capital gains tax can be complex, and professional advice is highly recommended. Currently, a 50% capital gains tax discount applies if the property is held for more than 12 months.
Understanding your tax obligations is a key part of responsible property ownership and investment in Victoria.