Claimable and Non-Claimable Legal Expenses On Rental Properties
What you can claim
You can claim the cost of the following as income tax deductions:
- evicting a non-paying tenant
- expenses incurred in taking court action for loss of rental income
- defending a damages claim regarding injuries suffered by a third party on your rental property.
What you can't claim
You can't claim the cost of the following as income tax deductions:
- solicitor's fees for the purchase of the property (these are a capital expense)
- solicitor's fees for the preparation of loan documents (these can be claimed as borrowing expenses)
- legal costs associated with resisting land resumption (these are a capital expense)
- legal costs associated with defending your title to the property (for example, defending an action by the mortgagee to take possession of the property where you have defaulted under the loan – these are a capital expense).