Our updated guidance clarifies how we assess rental property income and expenses from 1 July 2026, reflecting changes in the way investors rent their properties.
This is particularly important for those whose rental properties double as holiday homes.
What this means
Online booking platforms for short-term rentals have made it easier for people with a holiday home to rent it out while they’re not using it. This requires careful consideration of the deductions they can claim, and the associated apportionment.
If your client owns a rental property and uses the property as a holiday home, they’ll need to make sure the property is used (or held for use) mainly to produce rental income to be eligible to claim certain deductions.
If it’s not, they won't be able to claim any ownership or use expenses. These include:
- interest expenses
- council and water rates
- body corporate fees
- repairs and maintenance.
Only expenses such as advertising, cleaning after a guest stays, and booking fees and commissions are deductible.
If the holiday home is used mainly to produce income but with a small portion of private use (e.g. a week or a few weekends in the off season when there are no bookings), only then can they claim a deduction for ownership and use expenses. If they are eligible, expenses must be apportioned accurately to reflect the periods of private use.