Holiday Homes: What You Need to Know About Tax
Investing in a holiday home can be exciting, offering both lifestyle benefits and the potential for tax advantages. But whether you’re looking at a standalone house or a unit, it’s important to understand how the Australian Taxation Office (ATO) treats holiday properties so you can stay compliant and avoid surprises.
Written by
Invested In You
This is why our professional services go well beyond tax compliance and corporate accounting services. At Curve Accountants, our comprehensive approach is designed to present you with proactive, tailored advice that allows you to make smart financial decisions. From strategies for managing wealth and minimising tax to succession planning and business restructuring, we are committed to offering advice tailored to your unique situation.
Key Tax Considerations For Holiday Homes
Generally, only costs directly related to generating rental income are deductible. For example, you can usually claim expenses like:
- Repairs and maintenance (fixing leaks, painting, servicing appliances)
- Loan interest, council rates, insurance, and utilities
- Property management fees
- Depreciation on fixtures and fittings (e.g. ovens, carpets, air conditioners)
However, you cannot claim expenses from personal use. Cleaning after your own stay or fixing damage from family holidays won’t qualify. Large improvements that add value, such as a new deck or roof, are capital works and must be depreciated over time rather than deducted immediately.
Holiday Apartments In Commercial Complexes
If you own an apartment in a commercial holiday complex, it is still classed as a residential rental property for tax purposes. This means:
- Rental income must be declared in your tax return.
- Deductions may apply, provided the property is genuinely available for rent.
- GST does not apply to rental income, and GST credits cannot be claimed.
Even though these apartments sit within a commercial setting, the ATO treats each one as a residential property.
Apportioning Expenses
If you use the property personally as well as renting it out, expenses must be split. For instance, if the property is rented for six months and used by you for the other six, only half of the expenses can be claimed. The ATO’s examples and guidelines are helpful in working out the right balance.
Record-Keeping Matters
Accurate records are key. Keep track of rental income, expenses, and the dates the property is rented versus used privately. Retain all receipts and invoices-these will help substantiate any claims you make.
How Your Accountant Can Help
Your accountant can:
- Identify legitimate deductions
- Guide you on apportioning expenses correctly
- Advise on depreciation claims
- Ensure your reporting is accurate and compliant
Thinking of claiming deductions on your holiday home? Speak with your accountant today to make sure you’re maximising the benefits while staying on the right side of the rules. Please don’t hesitate to contact us to discuss further at [email protected] or on 03 9588 9000.
Helpful tip:
Keep detailed records of when your holiday home is rented and when it is used privately, as expenses must be apportioned correctly. Retain receipts for all deductible costs and distinguish between repairs and capital improvements. Ensure the property is genuinely available for rent before claiming deductions. Reviewing your records regularly can help you maximise legitimate claims while staying ATO compliant.
BERIVAN DUBIER
DIRECTOR
Reviewed by
SEAN DWYER
Edited by
Alix Dower
PRACTICE MANAGER
Free eBook Download
Starting A Medical Practice
David has extensive experience in writing, editing and marketing before joining iSelect in 2023 as Digital Editor. When not making our content better, you can find them browsing log cabins for sale in the forest.
REQUEST DOWNLOAD
Buying An Established Medical Practice
REQUEST DOWNLOAD
FAQ
Lorem ipsum dolor sit amet?
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Consectetur adipiscing elit sed do eiusmod?
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.
Duis aute irure dolor in reprehenderit?
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur.
Excepteur sint occaecat cupidatat non proident?
Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.
Related Blogs
How Tax Deductions and Offsets Work in Australia
Understanding the difference between tax deductions and tax offsets can help you make better financial decisions and avoid paying more tax than necessary. While both can reduce...
2026-27 Federal Budget – What the Federal Budget means for you, your family, and your business
BERIVAN DUBIER Last Updated May 13, 2026 | Fact checked | Your financial journey is an inherent part of your well-being and happiness. When you feel confident and your finances...
Payday Super FAQs for Small Business Clients
From 1 July 2026, the way employers pay super is changing. These FAQs explain what Payday Super means for your business, what’s different, and what you need to do to get...
Find Out How Curve Accountants Can Help
