The new landlord guide: your first 90 days, the money, the tax and 12 mistakes to avoid

The first year is where most new landlord mistakes are made, and the ATO has the numbers to prove it. Its most recent tax gap estimate puts the rental property share of the individuals not in business gap at $1.5 billion for 2022-23, and says the most common adjustments are for wrongly apportioned loan interest, capital costs claimed as repairs and private use that was never apportioned. None of those errors are exotic. They are the ordinary decisions you make in your first few months, made without knowing the rules.

This guide is what we wish someone had handed us at settlement. It covers the first 90 days, the property manager or self-manage decision, how the money actually works, what the ATO sees landlords get wrong, and 12 mistakes worth avoiding.

$1.5 billion

Most landlords own just one property

According to the ATO's Taxation statistics 2023-24, 2,335,540 individuals had an interest in a rental property in 2023-24. Of those, 1,672,616, or about 72%, held just one. And 1,266,454, or about 54%, reported a net rental loss for the year.

Two things follow. The typical landlord is someone like you, doing this alongside a job without a back office. And with more than half running the property at a tax loss, the difference between cash flow and tax (covered below) is not a technicality.

View data · Source: ATO Taxation statistics 2023-24, Table 8

Properties held	Net rent loss	Net rent neutral or profit
1	914,882	757,734
2	238,973	199,933
3	70,355	64,972
4	23,723	24,967
5	9,476	10,373
6 or more	9,045	11,107

The first 90 days as a new landlord

The order below is roughly the order we would do things in. Some steps overlap, and a property manager will handle several of them if you use one, but you are still responsible for the result.

Days 1 to 7: protect the asset

Insurance first. Ask your conveyancer when the property becomes your risk and make sure building cover (or, for strata, confirm the body corporate's building policy) is in place from that date. Then arrange landlord insurance, which typically covers things building insurance does not, such as tenant damage and loss of rent. Read the product disclosure statement for exclusions and excesses, and check whether cover depends on you doing routine inspections or holding a certain bond. The ATO lists building, contents, loss of rent and public liability insurance as immediately deductible for a rental.

Open a separate bank account. Rent goes in, property costs go out, nothing else touches it. This one habit solves half the record-keeping problems we see. It also makes it obvious when the property is costing you more than you expected.

Start your records folder on day one. Put the contract of sale, settlement statement, stamp duty receipt, conveyancing invoice, loan documents and any building and pest reports in it. Generally none of those purchase costs are deductible while you rent the property, but the ATO says many of them form part of the cost base for capital gains tax when you sell, and you must keep CGT records for at least 5 years after the sale. That can mean holding purchase paperwork for decades.

Days 7 to 30: get the property ready and legal

Check smoke alarms and safety. Every state and territory sets its own smoke alarm rules for rentals, and the requirements differ on alarm type, location, testing and who is responsible. Queensland, for example, requires interconnected photoelectric smoke alarms in rental properties, and the owner or property manager must test them within 30 days before a tenancy starts or is renewed, according to the Residential Tenancies Authority. Do not assume the previous owner left the property compliant. Check your state regulator's requirements and fix gaps before a tenant moves in.

Check minimum standards. Several states now set minimum rental standards covering things like locks, window coverings, heating, ventilation and electrical safety, and some require periodic gas or electrical safety checks. The details vary by state and territory, so go to your state regulator's website and work through its list line by line. Our rental reforms explainer tracks the broader changes.

Decide what work is repair and what is capital. If the property needs work before the first tenant, keep invoices itemised and note the date and condition of each problem. As explained in the tax section, work fixing defects that existed when you bought is treated differently to repairs caused by tenancy.

Keep evidence that the property is available for rent. The ATO says you can claim interest, rates and similar holding costs before the first tenant moves in, provided you are genuinely holding the property to rent it out, and that you should keep evidence such as communications with real estate agents or rental managers. Save the emails and listing screenshots.

Days 30 to 90: the tenancy paperwork

Use the standard lease for your state. Most states and territories have a standard form residential tenancy agreement. Check with your state regulator before adding special terms, because a term that conflicts with tenancy law is unlikely to help you. Write down what is included (appliances, window coverings, garden care) so there is no argument later.

Do a thorough ingoing condition report. Photograph every wall, floor, fixture and appliance, date-stamp the photos, and describe marks precisely ("3 cm scuff, left of bedroom 2 door") rather than generally ("some marks"). Give the tenant the time your state allows to review and return it. In our experience, bond disputes are won or lost on this document.

Lodge the bond with the right authority, on time. In most states and territories, bond money must be lodged with a government bond authority rather than held by you. The rules on maximum bond, lodgement deadlines and release vary by state and territory. Late or missed lodgement can lead to penalties. Check the rules with your state bond authority before you take any money.

Set up a maintenance process. Agree how the tenant should report repairs, keep a list of reliable tradespeople, and know which repairs your state treats as urgent and how quickly you must act on them. Your state regulator's website sets this out.

Property manager or self-manage: decide deliberately

There is no universally right answer. A property manager brings systems, tenancy law knowledge and a buffer between you and the tenant, and their fees are deductible. Self-managing saves those fees and gives you direct control, but you take on the legal obligations, the after-hours calls and the admin personally.

The questions that usually decide it: how far you live from the property, how much time you genuinely have, how comfortable you are with your state's tenancy law and difficult conversations, and whether you will keep records as well as a property manager would. If you use one, choose carefully and stay involved. Our guides on choosing a property manager and self-managing a rental property go into the detail.

Money basics: cash flow is not tax

Cash flow is what actually moves through your bank account: rent in, and mortgage repayments (interest and principal), rates, insurance, strata, land tax, management fees and repairs out.

Taxable rental income or loss is a different calculation. It excludes principal repayments (not deductible) and includes non-cash deductions such as capital works and decline in value of depreciating assets. It also spreads some costs over several years, such as borrowing expenses over $100, which the ATO says are claimed over 5 years or the loan term, whichever is shorter.

So a property can be cash flow negative by a few hundred dollars a month while producing a larger or smaller tax loss. Moneysmart's warning is blunt: rental income may not cover your mortgage and other costs, and you pay expenses up front even if you can later claim them. Build your budget on cash flow, not on the refund you hope to get.

Holding costs to budget for

Moneysmart lists the ongoing costs of an investment property as council and water rates, building insurance, landlord insurance, body corporate fees, land tax, property management fees if you use a property manager, and repairs and maintenance. Add interest, and set aside a buffer for vacancy. Moneysmart also suggests working out whether you could cover all costs short term if you had no tenant for a while.

Rental yield, simply

Gross rental yield is annual rent divided by the property's value. A property worth $600,000 renting for $550 a week earns $28,600 a year, a gross yield of about 4.8%. Net yield subtracts your annual holding costs (excluding loan repayments) before dividing, and it is the more honest number. Those figures are illustrative only, but the calculation is worth doing on your own property with real bills, then again each year.

Loan structure basics

Three rules to know before you touch the loan:

• Interest is deductible based on what the money was used for, not what secures the loan. The ATO says interest on a loan used to buy a new home is not deductible if you do not use the new home to produce income, even if the loan is secured against your rental.
• Principal is never deductible. The ATO says you cannot claim additional payments that reduce the principal. Paying down the investment loan faster may feel prudent, but if you also have a non-deductible home loan, many landlords prefer to direct spare cash there. That is a decision to make with your accountant or broker.
• Redraw is new borrowing. Under Taxation Ruling TR 2000/2, the ATO treats a redraw as a new borrowing, and the interest on it is deductible only if the redrawn money is used for an income-producing purpose.

Interest-only loans are common for investors, but Moneysmart notes the interest-only period ends and repayments then rise to cover principal as well. Know the date yours ends and budget for it.

The 2026 negative gearing change

If you bought recently, check this carefully. Under laws that passed in 2026, from 1 July 2027 losses on established residential properties purchased from 7:30pm AEST on 12 May 2026 can only be deducted against income from residential properties, including capital gains, according to the ATO and the Budget tax explainer. Excess losses carry forward. Properties held before that time are exempt from the change, and new builds keep the existing treatment. The 50% CGT discount is also being replaced from the same date for gains that accrue after 1 July 2027. Our negative gearing explainer covers who is affected and the detail as it firms up.

Tax basics: what the ATO sees landlords get wrong

The ATO has said repeatedly that most rental property owners get their returns wrong. In June 2024 it said the majority were making errors despite 86% using a registered tax agent, and in 2023 and 2024 it said 9 out of 10 rental property owners were getting their returns wrong. The same themes come up every year.

Initial repairs are not repairs

This is the classic first-year mistake. The ATO's guide says repairs are generally deductible when they relate to wear and tear or damage that occurred as a result of renting the property. Work that remedies defects, damage or deterioration that existed when you bought is an initial repair, which is capital in nature.

The ATO's own example is a couple who, before their first tenants moved in, repainted dirty walls, replaced broken light fittings, repaired doors and treated termite damage to floorboards. None of it was deductible as a repair. It could instead be included in the property's cost base. Depending on the work, some initial repairs may be claimed over time as capital works.

Replacing a whole item is not a repair either

Fixing a dishwasher is generally a repair. Buying a new dishwasher is not. The ATO says capital items such as dishwashers, curtains and heaters can only be claimed immediately if they cost $300 or less; otherwise they are depreciated over time. Improvements such as a new bathroom or kitchen are capital works, generally claimed at 2.5% a year over 40 years.

There is also a trap for anyone who bought an established property: since 9 May 2017, you generally cannot claim decline in value on second-hand depreciating assets (the existing oven, carpets, blinds) that came with a residential rental, unless an exception applies. New assets you install yourself can still be depreciated.

Apportionment, all the way down

The ATO's tax gap work lists "no or incorrect apportionment" of loan interest after refinancing for private purposes first among the most common reasons for adjustments to rental items. Its June 2024 warning to rental property owners gave an example: add $50,000 to an $800,000 rental loan to upgrade the family car, and you can only claim interest on the $800,000. Paying the private part back does not fix it, because payments must be apportioned for the life of the loan.

Apportionment also applies when:

• you co-own the property, where the ATO says income and expenses follow your legal ownership interest, regardless of any private agreement between owners
• the property is not rented for the whole year, or is used privately for any period
• you rent to family or friends below market rent, where the ATO says you can only claim expenses up to the amount of rent received

The ATO issued a new ruling, TR 2026/1, and practical compliance guidelines PCG 2026/2 and PCG 2026/3 on rental deductions, apportionment and holiday homes in 2026. If any part of your property is used privately, read them or ask your tax agent about them.

Records, or it did not happen

The ATO says rental expense records must show the supplier's name, the amount, what was bought, the date the expense was incurred and the date of the document, and you keep them for 5 years from 31 October (or from when you lodge, if later). It also expects you to record how you calculated any apportionment. As ATO Assistant Commissioner Rob Thomson put it in June 2024, "if you don't have sufficient records, you can't claim it."

The ATO also receives data from banks, land titles offices, insurers, property managers and sharing economy platforms, and runs data-matching programs for residential investment property loans and landlord insurance. Assume it can see what you can see.

For the full list of what you can and cannot claim, see our rental property tax deductions guide.

Common pitfalls: 12 mistakes to avoid

1. Claiming the pre-tenancy fix-up as repairs

Painting, patching and replacing broken fittings before the first tenant feels like maintenance. If the damage was there when you bought, the ATO treats it as initial repairs. Get itemised invoices and let your tax agent classify them.

2. Claiming the full cost of new appliances in year one

A new oven, air conditioner or set of blinds costing more than $300 is depreciated over its effective life, not claimed immediately. The ATO's case study involved a landlord who claimed blinds, a cooktop and air conditioners outright, then tried to claim a second cooktop bought for their own home. The return was adjusted and penalties applied.

3. Mixing private spending into the investment loan

A redraw for a holiday or a refinance that tops up the loan for a car permanently splits the loan into deductible and non-deductible parts. If you need money for private purposes, borrow it separately, and keep investment borrowing clean from the start.

4. Declaring net rent from the property manager's statement

The ATO says rent must be declared as the gross amount received, before the property manager takes out fees and expenses, and in the year the tenant pays, not when the property manager transfers it. It has also seen landlords declare net rent and then claim the same rates and repairs again. Use the annual statement as a checklist, not as your return.

5. Paying tradespeople cash with no ABN

The ATO's guide says that if a contractor does not quote an ABN, you may need to withhold 47% of the payment and send it to the ATO, and if you do not, you may not be able to claim the expense. The cheap cash quote can cost you the deduction.

6. Holding the bond yourself

In most states and territories, bonds belong with a government bond authority, lodged within a set time. Keeping the bond in your own account past the deadline can attract penalties and undermines your position in any later dispute.

7. A thin ingoing condition report

A one-page report with a few blurry photos will not win a bond claim for a damaged benchtop. Photograph everything, describe precisely, and keep the signed copy with your records. Remember that any bond money you keep for unpaid rent or damage is rental income, according to the ATO.

8. Assuming the property is compliant because it was rented before

Smoke alarm, safety and minimum standards rules change, and the previous owner may not have kept up. Check the current requirements with your state regulator yourself, before the lease starts.

9. Budgeting on the tax refund instead of cash flow

Rent comes weekly or fortnightly. Any refund arrives once a year, if at all. Build a cash buffer for vacancies, a rate rise, a strata special levy and one large repair, and keep it in the property account.

10. Setting the rent below or above market

Charging a friend "mates rates" or leaving the property priced above the market for months both have consequences. The ATO limits deductions to the rent received for below-market arrangements, and says a property must be rented or genuinely available for rent on commercial terms to claim interest.

11. Losing the purchase paperwork

Stamp duty (outside the ACT), conveyancing and buyer's agent fees are not deductible, but they may reduce your capital gain when you sell. The ATO also notes capital works claims are based on original construction cost, not your purchase price. A quantity surveyor's depreciation schedule is optional but often worthwhile, and its fee is deductible.

12. Assuming the old negative gearing rules apply to you

If you bought an established dwelling from 7:30pm AEST on 12 May 2026, from 1 July 2027 rental losses on it will not reduce your salary income. They carry forward against future residential property income and gains instead. Run your numbers on that basis before you commit to a loss-making structure.

What this means for new landlords

The first 90 days set the pattern for everything after. If you do a handful of things properly now, the rest of your years as a landlord get noticeably easier.

• This week: confirm insurance, open a dedicated account and create a records folder with every purchase document.
• Before a tenant moves in: check smoke alarms and minimum standards against your state regulator's requirements, and keep evidence the property is on the market.
• At the start of the tenancy: use the standard lease, complete a detailed condition report and lodge the bond on time.
• With your loan: keep it purely for the rental, and never redraw for private spending.
• At tax time: give your tax agent itemised invoices, flag anything done before the first tenant, and declare gross rent.
• If you bought after 12 May 2026: get advice on how the negative gearing change affects your cash flow from 1 July 2027.

None of this requires you to be an expert. It requires you to be organised from the start, which is a lot easier than becoming organised after the ATO asks.