f your holiday home is rented out, you need to include the rental income you receive as income in your tax return.
You can claim expenses for the property based on the extent that they are incurred for the purpose of producing rental income.
You will need to apportion your expenses if:
- your property is genuinely available for rent for only part of the year
- your property is used for private purposes for part of the year
- only part of your property is used to earn rent
- you charge less than market rent to family or friends to use the property.
See ATO for more info Australian taxation information
Holiday Rental Tax Deductions: The Basics
Holiday rental properties are a common type of investment property in Australia.
Although the operating costs of a holiday rental property can be higher than other rentals, rents are higher too. So, when well managed and maintained, the right property in the right place can be a very lucrative investment. Even more so when tax deductions, and capital growth are put into the mix.
It’s important that you get every tax advantage you’re entitled to for your holiday rental. However, the ATO is very vigilant when it comes to false or “unsubstantiated” claims.
The first thing to know is that record keeping is essential. If you don’t save receipts and keep records, you could lose out on thousands in tax deductions every year. Worse still; at risk of ATO audit.
What holiday rental property expenses can I claim as tax deductions?
If you own an Aussie holiday rental property you can claim valuable rental property tax deductions that make it easier – and financially positive – to own and operate your holiday rental.
Expenses you can claim as tax deductions for your holiday rental property include:
- Maintenance & repair costs
- Yard maintenance
- Advertising costs
- Pest control
- Insurance
- Cleaning
- Body corporate fees
- Council rates
- Property insurance
- Interest (on the funds borrowed to purchase the home)
- Depreciating assets
- Capital works deductions
- …and more.
Remember, you can’t claim holiday rental tax deductions for periods when the property is used for personal purposes (which includes staying there yourself, letting it to family & friends, or time when it’s not advertised and available for rent).