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Do your clients have a holiday home?

Deductions can only be claimed for expenses on holiday homes incurred for the purpose of producing rental income.

Last updated 22 November 2023

Your clients can only claim deductions to the extent their holiday home expenses are incurred for the purpose of gaining or producing rental income.

Many Australians own a holiday home, but there are a small number of holiday home owners who are not reducing their rental deductions when they aren't using the property to produce rental income. Deductions should be reduced if:

  • the holiday home is used, or reserved, by your client during peak periods when it could reasonably be expected that the property would be rented out
  • your client places unreasonable conditions that restrict the likelihood of their property being rented.

Check how your clients are using the property and if they are correctly apportioning their eligible deductions according to when the property was producing income.

Questions to ask

Here are a few questions you can ask that can assist with determining whether the deductions claimed by your client are valid rental deductions and if they need to be reduced:

  • How many days during the income year did you use or block out the property for your own use? Your clients can't claim deductions for the periods the property was used or blocked out by your clients.
  • How and where do you advertise the property for rent and is the rent in line with market values? If your clients only use obscure means of advertising or put unreasonable restrictions or conditions in the advert, they may not be entitled to claim deductions.
  • Will the restrictions, or the general condition of the property, reduce interest from potential holiday makers? If your client's property is not in a tenantable condition, they may not be entitled to claim deductions as it is unlikely to generate income.
  • Have you, your family or friends used the property? Your clients can't claim for periods of private use or when they keep the property vacant for personal reasons.
  • Is any part of the property off limits to tenants? When clients claim deductions, ensure to calculate and apportion deductions in relation to the part of the property that is available for rent.

By ensuring your clients' claims are reasonable, you are helping to level the playing field and reduce the likelihood that we will contact you.

Our information about Holiday homes can help with what can and can't be claimed.