Most property investors spend EOFY hunting for receipts. But the bigger opportunities — ones that can save thousands — come from your loan structure, not your filing cabinet. Here are six moves worth making before June 30, 2026.
1. Prepay Your Investment Loan Interest
If you're on a fixed-rate investment loan — or a variable loan where your lender specifically offers an interest prepayment facility — you may be able to prepay up to 12 months of interest before June 30 and claim the full amount as a deduction in the 2025–26 financial year, even though that interest covers months into next year.
This works under the ATO's 12-month rule for prepaid expenses. For an investor with a $600,000 loan at 6.5% (a typical investment rate above the current cash rate), that's roughly $39,000 in annual interest. If you're in the 37% tax bracket, prepaying brings forward a $14,430 deduction — money you'd otherwise wait 12 months to claim.
To do this, contact your lender before June 30 and request an interest prepayment. There are conditions — you can't prepay more than 12 months ahead, the loan must be for investment purposes, and the amount prepaid must be a genuine reflection of the interest due (you can't inflate it).
Tax note: This is a tax strategy — speak to your accountant before proceeding to confirm it suits your situation.
2. Get a Depreciation Schedule If You Don't Have One
A tax depreciation schedule is a report from a quantity surveyor that identifies everything in your investment property you can claim as a deduction year after year. There are two types:
- Division 43 (capital works): The building itself — 2.5% of the original construction cost per year, available for properties where construction commenced after 15 September 1987. This runs for up to 40 years from the date construction was completed.
- Division 40 (plant & equipment): Removable fixtures — air conditioning units, carpets, ovens, hot water systems, blinds.
For a property built in 2010 with a $300,000 construction cost, Division 43 alone is worth $7,500 per year in deductions. But note: if you're buying that property in 2026, the 40-year clock started running when construction was completed in 2010 — meaning approximately 24 years of Division 43 claims remain, not 40. Still significant, and well worth establishing.
A depreciation schedule from a firm like BMT Tax Depreciation or Washington Brown typically costs $500–800 and pays for itself many times over in the first year — and the cost is itself tax deductible.
Important rule: If you bought an existing (second-hand) residential property after 7:30pm AEST on 9 May 2017, you can no longer claim Division 40 on plant and equipment that was already in the property — only on new items you install yourself. Division 43 on the building structure remains fully claimable regardless of when you purchased.
If you don't have a schedule, EOFY is the right time to get one. Any deductions you can establish now apply to your 2025–26 return.
3. Do Your Repairs Before June 30 — Not After
Repairs to an investment property are immediately deductible in the year you incur them. Improvements are not — they're capitalised and claimed through depreciation over time.
The ATO's distinction
- Repair: Restoring something to its original condition — fixing a leaking roof, replacing a broken hot water system like-for-like, patching damaged walls.
- Improvement: Making something better than it was — adding a deck, renovating a kitchen, upgrading from carpet to timber floors.
If you've been putting off maintenance — worn carpet, a broken fence, faulty appliances — getting the work done and invoiced before June 30 means you claim it in this financial year, not next. The same applies to property management costs, insurance renewals, and council rate payments due before 30 June.
Note: initial repairs to a property that was not in working order at the time of purchase may be treated as improvements rather than repairs under ATO rules, regardless of whether the work is like-for-like. If your property needed repairs when you bought it and you're completing them now, check with your accountant before assuming they're immediately deductible.
4. Review Your Loan Structure: Offset vs Redraw
If you have extra cash sitting in your investment loan's redraw facility, it may be costing you at tax time.
When you make extra repayments into an investment loan, the loan balance goes down — and so does your deductible interest. An offset account keeps that same money separate from the loan balance. Your interest is still calculated on the full loan amount, which maximises the deduction you can claim.
The difference in numbers
On a $600,000 investment loan at 6.5%, with $80,000 sitting in redraw rather than offset:
| Scenario | Loan balance interest calculated on | Annual impact (37% bracket) |
|---|---|---|
| $80,000 in redraw | $520,000 | — |
| $80,000 in offset | $600,000 | +$1,924/yr in tax benefit |
The $80,000 difference generates $5,200 more in deductible interest. At 37%, that's $1,924 per year in additional tax benefit retained by using an offset account instead of redraw.
If you're in this situation, speak to a mortgage broker before June 30 about restructuring. In some cases the money can be moved out of redraw and into an offset — but the mechanics vary by lender and loan type.
5. Review Your Investment Loan Rate
With the RBA cash rate at 4.35%, many investment loan rates are sitting between 6.2% and 7.0% depending on your lender and how long ago you took out the loan. The spread between the most competitive and least competitive rates in the market right now is over 1%.
On a $600,000 investment loan, a 0.5% rate reduction saves $3,000 per year in interest. At 37% tax, roughly $1,110 of that saving is after-tax cash in your pocket — the rest effectively reduces your deduction, but you're still better off overall.
EOFY is a practical trigger to act. Call your lender and ask for a rate review — lenders often have retention rates they don't advertise. Or have a mortgage broker compare what's available across the market. If your loan pre-dates the 2026 rate cycle and you've rolled off a fixed rate recently, there's a good chance you're sitting on an uncompetitive rate.
6. Understand What the New Negative Gearing Rules Mean for Your Portfolio
The 2026 federal budget announced changes to negative gearing — but the timing is critical, and for most current investors, nothing changes this financial year.
For the 2025–26 financial year: Nothing has changed. Negative gearing still works exactly as it always has — rental losses offset against your salary income, no restrictions.
The changes only take effect from 1 July 2027 for new purchases. Here's where each group of investors stands:
Negative Gearing — Which Group Are You In?
| Purchase timing | Negative gearing treatment |
|---|---|
| Before 7:30pm 12 May 2026 | Fully grandfathered — offset losses against salary indefinitely |
| 12 May 2026 – 30 June 2027 | Offset against all income until 30 June 2027; then losses carry forward against rental income only |
| From 1 July 2027 onwards | Negative gearing only on new residential builds and government-backed affordable housing |
If you're considering purchasing an investment property, the clock on full negative gearing treatment is running. Properties settled by 30 June 2027 still receive transitional treatment. New builds from any date remain fully eligible.
A worked example: An investor with a $700,000 loan at 6.5% earning $40,000 in rent with $45,500 in interest has a $5,500 rental loss. In the 37% bracket, that loss saves $2,035 in tax this year — and will continue to do so indefinitely for grandfathered properties.
Tax disclaimer
The strategies in this article are general information only and do not constitute tax advice. Every investor's situation is different. Speak to a registered tax agent or accountant before acting on any of the tips above.
Written by Amit Narang, Mortgage Broker | Credit Representative 558902 of Outsource Financial Pty Ltd (ACL 384324)
Sources: ATO, Rental properties — deductions (including prepaid expenses, 12-month rule under Subdivision H ITAA 1936); ATO, Capital works deductions (Division 43); ATO, Repairs, maintenance and capital expenditure; Treasury, 2026–27 Federal Budget — negative gearing and CGT changes.
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