For non-resident landlords with Australian rental property, property management fees, agent commissions, and body corporate levies are all generally deductible against Australian rental income – but only when claimed correctly, apportioned accurately, and reported through the right non-resident tax framework. Getting this wrong is more common than it sounds: many expat landlords either miss legitimate deductions or misclassify capital versus revenue expenses, triggering ATO scrutiny. The stakes are higher for non-residents because you lose access to certain concessions available to Australian residents, and the ATO applies closer scrutiny to offshore landlords.
TL;DR
- Property management fees, letting fees, and body corporate levies are generally deductible as rental expenses for non-resident landlords in the year they are incurred.
- The distinction between revenue expenses (deductible now) and capital expenses (depreciated over time) is critical and often misapplied.
- Apportionment is required when a property is only partially rented or available for rent during the income year.
- Non-residents must lodge an Australian tax return to claim these deductions, even if withholding tax has already been deducted from rental income.
- Body corporate sinking fund contributions are treated differently from general body corporate levies and are not immediately deductible.
What Rental Expenses Can Non-Resident Landlords Actually Deduct?
The foundation of non-resident rental tax compliance is understanding what the ATO classifies as a deductible rental expense. Non-resident landlords are entitled to claim deductions for expenses incurred in earning Australian rental income, broadly consistent with the rules that apply to resident landlords – with some important differences in how residency affects broader tax calculations.
The following expenses are generally deductible in the income year they are incurred:
| Expense Type | Deductible? | Notes |
|---|---|---|
| Property management fees (ongoing) | Yes | Typically a percentage of rental income collected by the agent [1][3] |
| Letting/leasing fees | Yes | Charged when a new tenant is placed; usually equivalent to 1-2 weeks rent [6] |
| Advertising costs | Yes | Costs to find tenants, including online listings |
| Body corporate levies (general/admin fund) | Yes | Ongoing levies for day-to-day building management |
| Body corporate sinking fund contributions | No (not immediately) | Capital in nature; only deductible when the fund spends money on repairs |
| Lease preparation fees | Yes | Administrative costs for preparing tenancy agreements [5] |
| Repairs and maintenance | Yes (revenue repairs) | Initial repairs or improvements are capital, not immediately deductible |
How Do Property Management Fee Structures Work Across Australia?
Beyond knowing that management fees are deductible, non-resident landlords benefit from understanding the fee structures their agents use – because the structure determines what you are actually paying and therefore what you are claiming. Across Australian capital cities, fee models vary materially [3][6][7][8].
Most property managers charge:
- An ongoing management fee: A percentage of rent collected each week or month. Rates vary by city and agent [3][6][7][8].
- A letting fee: A one-off charge when a new tenancy commences, typically expressed as a number of weeks’ rent [6].
- Lease renewal fees: A smaller fee charged each time an existing tenancy is renewed [1].
- Routine inspection fees: Some agents charge per inspection; others include this in the management fee [4].
- Tribunal representation fees: If a tenancy dispute proceeds to a tribunal, additional charges may apply [2].
For non-resident landlords, every one of these items is a separate line on your rental expense schedule and should be recorded individually. Lumping them together increases the risk of miscategorisation at lodgment time.
What Is the Revenue vs. Capital Distinction and Why Does It Matter?
Building on the fee breakdown above, the harder question for most non-resident landlords is not whether a fee is deductible, but whether it is deductible now or must be depreciated over time. The ATO draws a firm line between revenue expenses (deductible in full in the year incurred) and capital expenses (added to the property’s cost base or depreciated).
- Revenue expenses: Ongoing management fees, letting fees, advertising, routine body corporate levies, repairs that restore an asset to its original condition.
- Capital expenses: Initial repairs on a newly acquired property, improvements that add lasting value, body corporate sinking fund contributions, capital works (which may attract a building works deduction under Division 43).
A common trap: if you buy a property and it needs work before tenants move in, those costs are capital, not revenue repairs. The ATO treats them as part of the acquisition cost, not an ongoing maintenance expense.
Tax deductions and apportionment of expenses
Apportionment is a requirement, not an option, when your property is not available for rent for the full income year or is used partly for private purposes. The ATO requires you to claim only the portion of expenses that corresponds to the period the property was genuinely available for rent at market rates.
- Fixed annual expenses such as body corporate levies are fully deductible for the entire period a property is either rented or genuinely available for rent. Apportionment is only required if the property was used for private purposes or was not genuinely available for rent during part of the year – for example, if the property was vacant for 3 months and was not being offered for rent during that time, only the portion of expenses relating to the income-producing period would be deductible.
- If you stayed in the property yourself for any period, expenses for that period are not deductible.
- Letting fees tied to a specific tenancy are deductible in full for that tenancy, since they directly relate to income-producing activity.
Do Non-Residents Still Need to Lodge an Australian Tax Return?
Yes. Withholding tax collected from rental income by an agent under the non-resident withholding rules does not replace the obligation to lodge an Australian tax return. Lodging a return is how non-resident landlords formally claim their deductions – including all the property management fees, agent commissions, and body corporate costs discussed above. Without lodging, those deductions are simply left on the table.
Non-residents are taxed on Australian-sourced income, including rental income, at non-resident tax rates for the relevant financial year. The deductions you claim reduce your assessable rental income, which directly reduces the tax payable. This is precisely where specialist non-resident tax knowledge matters: a generalist accountant unfamiliar with expat returns may not correctly apply the non-resident rate schedule or correctly treat apportionment and capital/revenue distinctions.
Frequently Asked Questions
About ODIN Tax
ODIN Tax is Australia’s specialist tax agent practice for Australian expats and non-residents, operating as part of the ODIN Group alongside Odin Mortgage. As a Registered Australian Tax Agent, ODIN Tax prepares Australian tax returns, resolves overdue lodgments, and advises on tax residency, CGT, and negative gearing for clients living across 40+ countries. Led by Tax Director Pau Lam, the practice has served 10,000+ Australian expats and holds a 4.9/5 Google rating from over 330 verified client reviews. Unlike general accounting firms, ODIN Tax’s entire practice is built around the non-resident tax landscape – meaning the complexity of owning Australian property from overseas is the firm’s core expertise, not an afterthought.
Own Australian property from overseas and want to make sure you are claiming every legitimate deduction correctly?
ODIN Tax specialises exclusively in Australian expat and non-resident tax returns. Our team understands the nuances of non-resident rental property tax that generalist accountants routinely miss.
Visit us at www.odintax.com to learn more or get in touch with our team.
References
- REIQ | Property Management Fees An In-Depth Guide to Understanding the Costs and Benefits (www.reiq.com)
- You and your property manager – Consumer Protection – LGIRS (www.consumerprotection.wa.gov.au)
- Rental Agent Fees Australia For 2025 (urbanrenters.com.au)
- What is property management: a complete guide (entryeducation.edu.au)
- Requirements when managing property in NSW | NSW Government (www.nsw.gov.au)
- Sydney Property Management Fees [2026 Guide] + Cost Calculator (whichrealestateagent.com.au)
- Property Management Fees in Melbourne | What to Expect (www.buyersadvocate.com.au)
- Perth Property Management Fees Guide 2025 | HERE Property (www.hereproperty.com.au)
