Most of the costs of selling a rental aren't tax deductions, but they aren't lost either. Your agent's commission, advertising and conveyancing are added to the property's cost base instead. That's broadly what the property has cost you in total, and the bigger it is, the smaller your capital gain, the profit you pay tax on.

What you can still deduct are the property's running costs, such as interest, rates and repairs, for as long as it's rented or genuinely available to rent. A few loan costs also become deductible when you pay out the mortgage.

This guide is for people who own a rental in their own name, alone or with someone else. If you co-own it, each owner works out their own share of the costs and the gain. Different rules apply to companies, trusts and super funds.

Where each cost goes

You can't put a cost in the cost base if you've claimed it, or could have claimed it, as a deduction. Capital works deductions, the yearly deduction for the cost of the building and structural work, also come off the cost base, which makes the gain bigger.

Can you claim agent fees and other selling costs?

Not as deductions. The ATO says you can't deduct "commissions or other costs paid to a real estate agent" for the sale of a rental, and the same goes for advertising to sell, conveyancing and legal fees for the sale.

The ATO's guide to capital gains tax when selling your rental property shows how they're added to the cost base. In effect, they come off your capital gain rather than your income, as long as the sale is taxable.

What are your selling costs worth in tax?

Say you're the only owner, you sell for $900,000 under a contract signed before 1 July 2027, and your selling costs are $26,500: a $20,000 commission, $5,000 for marketing and $1,500 for conveyancing. Provided your gain before these costs is more than $26,500, they reduce it by $26,500.

If you've owned the property for at least 12 months and you're an Australian resident, only half the gain is taxed under the current rules. This is the 50 per cent CGT discount, so your taxable gain falls by $13,250.

If that $13,250 is all taxed in the 37 per cent bracket (the 2026–27 rate for $135,001 to $190,000), plus the 2 per cent Medicare levy, your tax falls by about $5,170. Your actual saving depends on your income and any capital losses.

That's why it matters which column a cost falls in. Where the full discount applies, $1,000 of selling costs generally reduces your taxable income by $500, while a $1,000 deduction reduces it by $1,000.

For what each cost is likely to be, see what it costs to advertise and market a property and what a conveyancer costs. Our guide to tax on selling an investment property shows how the whole gain is worked out.

What can I still deduct in the year I sell?

The property's running costs stay deductible for as long as it's rented out, or genuinely available to rent at a market rent. That includes interest on the loan, council rates, insurance, property management fees, pest control and repairs.

If it stops being a rental part way through the financial year, costs like interest and rates are split by the number of days it was rented or available. Costs that relate only to the rental period, such as the property manager's fees for that time, can be claimed in full.

Land tax works differently. If you receive a land tax assessment for the year and then sell, you don't need to split it. If the buyer reimburses you for land tax at settlement (the day ownership passes to the buyer), that amount counts as rental income.

What if the property is empty while it's for sale?

Once the property is no longer rented or available to rent, its running costs generally stop being deductible. That includes the weeks it sits empty while you prepare and market it for sale.

Those costs can go into the cost base instead, if you bought the property after 20 August 1991. They can't be used to create or increase a capital loss, which is when you sell for less than the cost base.

If your tenant stays until settlement, the property is still earning rent, so its running costs generally stay deductible for that time.

What about travel and my tax agent?

Travel to inspect or maintain a residential rental isn't deductible for most individual owners, and it can't go in the cost base either. Your tax agent's fee for preparing your return is deductible.

Can I claim repairs before I sell?

Yes, in some cases. You may still be able to claim repairs after you stop renting the property, where both:

• the need for the repairs came from the time it was rented
• the property earned rent in the same financial year the repair cost is incurred, generally when the work is done and billed

So if the property stopped earning rent before 30 June, a repair done and billed after 30 June generally isn't deductible.

A repair restores something to its previous condition, such as repainting faded walls or fixing a broken fence. An improvement makes the item better, more valuable or more desirable, or changes its character, such as a new bathroom. Its structural cost goes into the cost base, less any capital works deductions, and new appliances are depreciated separately.

Fixing a defect that was there when you bought the property isn't a repair either. It can generally be claimed as capital works deductions over 40 years, and goes into the cost base less those deductions. If a job mixes repairs and improvements, ask for an itemised invoice, because the ATO treats a job it can't split as an improvement.

Loan costs when you pay out the mortgage

Three costs can be deductible when you pay out the loan:

• Loan setup costs you haven't finished claiming. Establishment fees and lender's mortgage insurance are normally claimed over five years. If you repay early, the rest can generally be claimed that year, but only to the extent the borrowed money was used to earn rent that year, so possibly none.
• Mortgage discharge fees, in the year you pay them, to the extent the property and loan were used to earn rent over the time you owned it. Our guide to mortgage exit fees covers what lenders charge.
• Break costs for paying out a fixed-rate loan early, which the ATO treats as a cost of discharging the mortgage.

You can work out the remaining borrowing expenses with the ATO's borrowing expenses calculator.

Depreciation in the year you sell

You can claim depreciation on fittings such as appliances and carpets for the days you owned them that year, while the property was rented or available to rent. The same applies to capital works deductions on the building.

If you bought the property after 9 May 2017, fittings that were already in it generally can't be depreciated at all. The same generally applies to fittings you used while it was your home.

If you have a depreciation schedule from a quantity surveyor, give it to your tax agent. Fittings sold with the property can add to your income, give you a deduction, or make a capital gain or loss, and our guide to the tax on selling a rental explains how.

Can a capital loss reduce my other income?

No. A capital loss on the sale, or on another investment such as shares, can only reduce capital gains, never your wages or other income.

A loss you can't use in the year carries forward to later years, with no time limit. Our guide to reducing capital gains tax covers the other legitimate ways to pay less.

Does any of this change from 1 July 2027?

What changes is how the gain is taxed, for contracts signed from 1 July 2027. For most established rentals, the part of the gain made after that date no longer gets the 50 per cent discount. Instead, the property's value at 1 July 2027 is adjusted for inflation, and a minimum 30 per cent tax can apply, with some exceptions.

If you bought an established rental after 7:30pm (AEST) on 12 May 2026, there's a second change. From the 2027–28 year, an overall loss on rentals like it generally can't reduce your other income, such as your wages. It's carried forward and can be used against rental income or capital gains from residential property.

Our guide explains how the 1 July 2027 changes work.

What records should I keep?

Keep the contracts for both the purchase and the sale, the stamp duty and conveyancing records from when you bought, every selling cost, and how you worked out the gain. Keep them for at least five years after the sale, and longer if you carry forward a capital loss.

The ATO also asks you to record whether you claimed each cost as a deduction, so nothing is counted twice. For each rental expense, the record should show who you paid, how much, what for and when.

What else do I need before settlement?

Each Australian resident owner needs a clearance certificate from the ATO, or the buyer generally holds back 15 per cent of the price. It's free but can take up to 28 days, so the ATO suggests applying as soon as you're thinking of selling.

Questions to take to your tax agent before you sell

• Which of my costs this year are deductions, and which go in the cost base?
• When will the property stop being available to rent, and what does that mean for my deductions?
• How would my deductions change if the tenant stayed until settlement?
• Which repairs could be deductible, and in which financial year?
• Do I have borrowing expenses I haven't finished claiming?
• Do I have the records of what I paid when I bought?
• How would the 1 July 2027 change affect me, depending on when the contract is signed?

Where to check the details

The rules above come from these official sources:

• ATO: Rental properties guide 2026: rental expenses
• ATO: cost base of an asset
• ATO: repairs and maintenance
• ATO: records for rental properties