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  • Homing in on holiday homes

    In the lead up to the June long weekend the ATO is reminding taxpayers that it’s paying close attention to rental properties located in popular holiday destinations around Australia.

    Assistant Commissioner Kath Anderson said that last year the ATO identified a large number of mistakes with deductions for rental properties, particularly with regards to holiday homes.

    “We’ve noticed some people are claiming deductions for holiday homes even where the property is not genuinely being rented out, or genuinely available for rent,” Ms Anderson said.

    “There’s no problem with people using their rental property for their holiday, but holiday home owners need to remember they can only claim tax deductions for expenses made during a period when the home is rented out or genuinely available for rent.”

    Property owners also need to understand that if they rent their property at a discounted rate, or ‘mates’ rates’ they can only claim deductions equal to the amount of rent charged.

    “One taxpayer had to pay the ATO back over $45,000 in tax from deduction claims made for a holiday home they were renting out to friends and family below the market rate.”

    Ms Anderson said the ATO is focused on using data to identify errors.

    “Property owners should be aware that incorrect rental property claims will not go unnoticed. Technology enhancements and extensive use of data is allowing us to identify incorrect or suspicious claims. We also have a good idea of the locations likely to be used for holiday homes.”

    Ms Anderson said that all rental property owners, particular those who rent out holiday homes, should always double-check their claims before lodging their tax return, and follow a couple of simple rules.

    “Firstly, make sure that you declare all rental income and only claim deductions for periods that the property is rented or was genuinely available for rent.”

    “Secondly, make sure you have accurate records of expenses, and strong evidence of the property being rented or genuinely available for rent at market rates. Advertising through a real-estate agent or an online site is not always enough evidence to demonstrate that a property is genuinely available for rent.”

    For more information on Holiday homes, visit

    For more general information on rental properties, visit

    Claiming deductions for your holiday home?



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Make sure it’s genuinely available for rent by answering these 4 questions

    As a rental property owner, you probably know that you can claim deductions on expenses for your investment property when it’s rented out. But what happens when your property isn’t rented out? You can claim a deduction if your property is genuinely available for rent; ask yourself the following four questions to help you determine this.

    Different rules apply if you’re renting out your private residence – check out for more information.

    How do you advertise your rental property?

    You need to advertise in a way that maximises exposure to potential tenants such as an online site. Advertising in ways that limits exposure to potential tenants, such as by word of mouth, means your property may not be genuinely available for rent.

    What location and condition is your rental property in?

    It’s important that your rental property is in a location and condition that tenants will want to rent it in. If your property is poorly cared for, or in a remote area, it is unlikely to be tenanted, and may not be classed as genuinely available for rent.

    Do you have reasonable conditions for renting the property and charge market rate?

    If you place unreasonable conditions that reduce the likelihood of your property being rented out, such as setting the rent above market rate, your property may not be considered genuinely available for rent. Likewise, if you, your family or your friends stay for free, your property will not meet the criteria during that time period. If the property is being tenanted at a discounted rate (‘mates’ rates’) then the allowable deductions are limited to the amount of rent charged, not market rates.

    Do you accept interested tenants, unless you have a good reason not to?

    If you refuse to rent out your property to interested potential tenants without a good reason, this indicates that you may not have a genuine intention to make income from the property and could be reserving it for private use. In this case, your property wouldn’t meet the criteria for being genuinely available for rent.

    Last modified: 07 Jun 2017QC 52474