Holiday Rental Property Deductions

Holiday rental properties have again been mentioned in the press from the Australian Taxation Office that they will be the subject of their focus, with the most likely candidates are highly negatively geared rental properties with postcodes that fall in and around known holiday destinations.

All taxpayers need to ensure that they are not claiming deductions they are not entitled to, with the main focus for holiday rentals being whether the Taxpayer has set aside time for their own personal use of the property. For a deduction to be allowable on any rental property (not just the holiday rentals), the property must genuinely be available for rent. In circumstances where the taxpayer uses the property for their own enjoyment, we are required to apportion deductions between taxable and personal use. This also applies for any family/friends who might have access to the property at ‘mates rates’.

Given we live in the era of electronic information, Taxpayers who advertise their holiday rentals though online means (such as Airbnb/Stayz etc) should also be aware that that the Tax Office can quickly and easily data match information provided by the online booking agencies against what is included on your tax return so we need make certain that all sources of rental income are included each year.

If you have any uncertainty on whether you are fully or partially entitled to a deduction against your rental income, please contact our office.

Contributed by Adam Burgess.