Who can claim
This deduction is available to individuals and companies.
- The legal work is directly connected with producing rental income, such as evicting a non-paying tenant, recovering lost rent or defending an injury damages claim at the rental property.
- The rental property is rented or genuinely available for rent for the relevant period.
What you cannot claim
- Legal costs to buy or sell the property, resist land resumption or defend title are capital and are not an immediate rental deduction.
- Private, non-rental and mixed-purpose legal work must be excluded or apportioned.
How the amount is worked out
Claim the eligible revenue portion of the incurred legal cost. Consider capital-gains-tax cost-base treatment for capital legal costs.
Records the ATO expects
- Itemised legal invoice
- Matter and outcome record
- Rental availability records
Where this rule comes from
Primary source: ATO Rental properties guide 2026 (Rental properties guide 2026). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.
Supporting sources:
- Income Tax Assessment Act 1997 section 8-1 (Section 8-1)