Recently, the ATO has issued a warning for individuals who own a holiday home and claim certain deductions against their income.

Generally speaking, when a holiday home is genuinely “available for rent”, the costs associated with the property are an allowable deduction. This is the same treatment as long-term rental properties.

However, the ATO is set to scrutinise certain holiday homes where, in their opinion, the property is not genuinely available for rent. Their intention is to deny deductions for these properties against other taxable income.

Even though there are other indicators where the ATO will attempt to deny deductions, the following circumstances will highlight this additional scrutiny:

The property being “blacked-out” for personal use during high-season.
The asking rent is set well above comparable properties in the area.
The location, condition and access to the property is poor.

If you require any assistance regarding this, including options available to you for record-keeping purposes, please do not hesitate to get in touch.