The Australian Taxation Office (ATO) has refreshed and clarified its guidance on record keeping for rental properties. While much of the core record-keeping framework remains familiar, the updated guidance places sharper focus on what records to keep from purchase through to sale, and on situations such as co-ownership, short-term rentals and renting out part of your home.

Here are our 8 key takeaways from the ATO’s updated guidance:

1. Record keeping starts from when you purchase the property

Records should be kept from the time you purchase the property, even before it starts earning rental income. This includes purchase and settlement documents, loan records, title information and related costs. These documents are important both for annual tax claims, and for working out any capital gain or capital loss when the property is eventually sold.

2. Keep evidence of all rental income

All rental income must be declared, including amounts received from short-term stays, renting out a room, retained bond amounts in place of rent, and insurance payouts that relate to lost rent.

Keep statements from property managers, tenancy records, lease documents, booking platform summaries and bank records so that income can be verified.

3. Expenses must be supported

You can generally only claim a deduction if you have records that show what the expense was for, who supplied the goods or services, the amount, and when the expense was incurred.

If the document does not show the payment date, independent evidence such as a bank statement may also be needed.

It is also important to distinguish between repairs, maintenance, depreciating assets and capital works, because each category can be treated differently for tax purposes.

Costs incurred to improve or substantially replace something are not usually immediately deductible and may instead be claimed over time or taken into account for capital gains tax purposes.

4. Repairs and capital expenses need detail

Good documentation helps determine whether a cost is a repair, maintenance, a depreciating asset or capital works. It is useful to keep invoices that clearly describe the work performed, along with before-and-after photos for structural improvements where relevant, so the treatment can be supported if reviewed later.

5. Any private use requires apportionment

If a property is used partly to earn income and partly for private purposes, expenses must be apportioned and supported by clear records. This is particularly relevant for short-term rentals, holiday homes and situations where part of a main residence is rented out.

6. Digital records are acceptable

Records can be kept electronically or on paper. They must be in English, or readily translatable into English, and any copies should be clear and true copies of the originals. Backing up digital records is also strongly recommended.

7. Multiple properties must be recorded separately

If you own more than one rental property, keep separate records for each property. If the property is co-owned, income and most expenses should also be allocated according to each owner’s legal interest, so ownership records should be kept as well.

8. Hold onto your records for at least 5 years

The five-year rule depends on the type of record. Income and expense records are generally kept for 5 years from the date you lodge the relevant tax return, while records relating to purchase, ownership, capital works, depreciating assets and sale may need to be kept for longer, often until 5 years after the property is sold or after the last claim is made.

Rental property record‑keeping checklist

As a practical check, do you have copies of the following documents and records?

• Purchase records, including the contract, settlement statement, certificate of title, loan documents, mortgage papers, inspection reports and relevant stamp duty, legal and search costs.
• Ownership records showing each owner’s legal interest if the property is co-owned.
• Rental income records such as property manager statements, tenant leases, booking platform summaries, bank statements and records of any bond amounts retained in place of rent.
• Evidence for rental expenses, including interest, rates, insurance, bank charges, advertising, gardening, repairs, maintenance and management fees.
• Detailed invoices and supporting records for depreciating assets, capital works and structural improvements, including before-and-after photos where relevant.
• Records showing rental periods, vacant periods, private use and any apportionment calculations.
• If a main residence later becomes a rental, records of any repairs before first renting, evidence of periods you lived there, and a market valuation at the time income-producing use begins.
• Selling records, including the sale contract, sale settlement statement, legal fees and selling agent commission.

How can AFS & Associates help?

Our team works with rental property owners to set up practical record-keeping systems, classify expenses correctly and prepare returns efficiently. Good records support accurate tax returns, help substantiate legitimate deductions and make it easier to respond if the ATO asks questions later.

This information is general in nature and individual circumstances can differ. If you would like tailored support for your rental property, please contact our team for advice based on your situation and current ATO guidance.