Can you claim interest and rates on vacant land?

No, not for most owners. Since 1 July 2019 the costs of holding vacant land, such as the loan interest, land tax and council rates, cannot be deducted. This is the law as read on 19 October 2026.

What is the rule?

Costs of holding vacant land are not deductible, from 1 July 2019, even if the land was bought before then. It is section 26-102 of the Income Tax Assessment Act 1997. The ATO explains it in Deductions for vacant land after 1 July 2019.

When is land vacant?

Land is vacant while it has no substantial and permanent structure. A fence, a retaining wall, a residential garage or shed, or a tiny house not fixed to the land is not one. The ATO's example is a fenced block with a retaining wall, which is still vacant.

What happens when a home is built?

The land stays vacant until the new home can lawfully be lived in. After that the costs are claimable only once the home is rented or available for rent.

What does it look like in dollars?

Take a block with $9,000 a year of loan interest, $2,200 of council rates and $1,800 of land tax. That is $13,000 of holding costs, and the claim is $0 while the block is vacant.

The same costs on a rental with a finished house on it are rental expenses. They are claimed in the usual way, with the rent as income.

Who is not covered?

A company, a super fund that is not self-managed, a managed investment trust and a public unit trust can still claim. So can land used in carrying on a business, and some land held by primary producers.

What should I keep?

• The date the home could lawfully be lived in, such as the occupancy certificate.
• The date it was first rented or listed for rent.
• The rates, land tax and interest bills, kept by period.

On PropRetire the rental property tax calculator works the tax a rental adds or saves, and is loan interest deductible covers what a loan paid for.