We're sending letters to taxpayers where our data shows the rental income they've received is significantly lower than the expenses they've claimed over multiple years. We're encouraging recipients of these letters to review their claims and correct any errors they may have made.
What you should do
If your client contacts you about our letter:
- ask them how they use their rental property
- review their records and the relevant tax returns lodged
- lodge amendments where necessary, taking into account the periods the property was:
- rented out
- used for private purposes
- rented at non-commercial rates.
Holiday homeowners
From 1 July 2026, if you have clients who own a rental property and they also use it as a holiday home, they can only claim a deduction for ownership and use expenses if the home is mainly used (or held mainly for use) to produce rental income.
To work out if a holiday home is mainly used (or held mainly for use) to produce rental income, you must consider:
- how the holiday home is used
- what period the property was dedicated to income-producing use
- how much time your client used the holiday home themselves (including by family and friends)
- how often the property is available for use as a rental during peak holiday times (for example school holidays, public holidays or peak season demand periods).