Maximising rental income: strategies for Australian property owners

Maximising rental income is something every Australian property investor should strive for, and it’s a goal we’re passionate about helping people achieve. Last year saw some exceptional rental growth and with a potential interest rate cut coming up, it’s a great opportunity for investors to focus on cashflow, or take the leap into their next property. Over the years, we’ve seen countless opportunities missed simply because investors weren’t fully aware of the strategies available to them. One of the most significant tools in your arsenal, and one that’s often overlooked, is property depreciation. Let us share some insights on how you can make the most of it and other strategies to boost your returns.

1. Leverage property depreciation

Did you know that Australian property investors are leaving an incredible $2.88 billion in unclaimed depreciation deductions on the table? That’s money you could be using to improve your cash flow and reduce holding costs. Property depreciation is one of the most effective ways to maximise your cashflow because it allows you to claim the decline in value of your building and its fixtures (where they qualify) as a tax deduction.

We always recommend getting a thorough depreciation schedule prepared by a qualified Quantity Surveyor. It’s a small investment of around $600-$700 that can yield huge benefits. Even if your property isn’t brand new, there are often significant deductions to be claimed. For renovated properties, the benefits can be even greater, which brings us to our next point.

2. Renovations and depreciation go hand-in-hand

Renovating your property is a great way to add value. The benefits can include higher rental income, better quality of tenant and possibly the chance to revalue the property to withdraw some equity for the next purchase! When you renovate your property, you’re not just increasing its rental appeal—you’re also unlocking additional tax deductions. New additions like ovens, dishwashers, or air-conditioning units can be claimed as plant and equipment deductions, while structural improvements like updated kitchens and bathrooms generally fall under capital works deductions which give you a 2.5% deduction based on the cost of the improvements, every year for 40 years.

One of the biggest mistakes we see is investors failing to update their depreciation schedules after completing renovations. By doing so, you ensure that every improvement is accounted for, which could mean thousands of dollars in additional deductions. Renovating is a smart way to increase your rental income, and when paired with the right depreciation strategy, the financial benefits can be game-changing.

3. Make smart renovation decisions

When it comes to renovations, we always advise focusing on areas that deliver the highest return on investment. Kitchens, bathrooms, and modern amenities like air conditioning are all great options. But don’t just renovate for the sake of it—consider the demographic you’re targeting and the expectations of tenants in your property’s location. Strategic renovations not only justify higher rents but also attract quality tenants.

4. Set the right rent

Pricing your rental property correctly is key. If you price it too high, you risk extended vacancies; too low, and you’re leaving money on the table. Regularly reviewing market conditions and working with a good property manager can help you stay competitive while ensuring your property’s value is reflected in the rent you charge. With state legislation in place minimising the frequency of rental reviews, it’s important not to let the market value slip away from you so a close relationship with your trusted property manager is key. For your own peace of mind, you can also do you own comparative market analysis (CMA) or ask the property manager of how they came to their market rent estimation.

5. Keep your property in top shape

A well-maintained property is more likely to attract long-term tenants who are willing to pay a premium. Regular inspections and prompt maintenance are essential to preserving your property’s value and keeping tenants happy. From a taxation perspective, anything that is classified as repairs and maintenance is an immediate deduction in the year the cost is incurred, so don’t forget to collect your receipts and claim the costs with your accountant. It’s a simple step, but one that pays off in the long run.

6. Know your tenants

Understanding your target tenant demographic is a game-changer. Whether your property appeals to families, young professionals, or retirees, tailoring it to their needs can make all the difference. Features like extra storage, child-friendly spaces, or even a modern design aesthetic can help you secure higher rents and reduce vacancy periods.

Final thoughts

Maximising rental income doesn’t happen by accident—it requires a strategic approach. From claiming every dollar of depreciation to making thoughtful renovations and staying on top of market trends, there’s so much you can do to improve your returns.

The fact that $2.88 billion in depreciation deductions goes unclaimed is staggering. Don’t let that be you. Reach out to our experts at MCG Quantity Surveyors, update your schedules, and take advantage of the tax benefits you’re entitled to.

By being proactive and informed, you can make the most of your investment and unlock the full potential of your property portfolio. It’s your money—let’s make sure you keep as much of it as possible.

If you’re still in search of the perfect investment property for yourself, visit Homely to locate your next opportunity. Don’t forget to save an Alert so you never miss out on the perfect property.