Who can claim
This deduction is available to individuals and companies.
- Deductible rental expenses exceed assessable rental income for the property or rental portfolio.
- The property is rented or genuinely available for rent and each expense satisfies its own deduction rule.
What you cannot claim
- Do not create a rental loss by including private, capital, acquisition, disposal or non-commercial family-use costs.
- A capital loss on sale is not a rental loss and cannot reduce salary or wages.
- Co-owners generally divide income and expenses according to legal ownership.
How the amount is worked out
For 2025-26 and 2026-27, calculate all assessable rent less deductible rental expenses. A net rental loss can generally reduce other assessable income, including salary, wages or business income. Any amount not absorbed is carried forward under the ordinary loss rules.
Records the ATO expects
- Rental income and expense schedule
- Loan statements and tracing
- Ownership shares
- Private-use and availability calendar
Before you rely on this rule
This review confirms the overall rental result. Add the underlying deductible expenses separately so they are not counted twice.
Where this rule comes from
Primary source: Income Tax Assessment Act 1997 section 8-1 (Section 8-1). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.
Supporting sources:
- ATO Rental properties guide 2026 (Rental properties guide 2026)
- ATO business losses (Updated 6 May 2025)