Holiday Home Tax Obligations

If you’re one of the lucky Australians that owns a holiday home, perhaps a cute little beach shack on the coast or a quaint cottage surrounded by wildflowers, you’re living the dream. It’s nice to know that sitting not too far away from the hustle and bustle of everyday life lies a little slice of holiday happiness. Holiday homes are not only a great way to unwind, but can also be a great source of extra income.

Income Tax

Holiday rental properties are a popular type of investment property throughout Australia. If you decide to rent out your holiday home as an extra source of income, the income made from your holiday rental is assessable income for tax purposes and therefore, must be declared to the ATO. Holiday homes differ slightly from rental properties as the rental periods are generally much shorter and the rent is much higher per night than regular rental properties. Holiday homes can be a great source of income for these reasons.

As the income earnt from the holiday home is taxable income, you may claim deductions on the rental expenses of the home. The list of expenses to claim for a holiday home is quite extensive, potentially making the holiday home a rather attractive investment option.

To claim deductions for the holiday property, there are a couple of rules you will need to abide by to ensure you are claiming legitimately. You may only claim expenses for the home while the holiday home is advertised, available for rent or rented. You cannot claim expenses while the house is being used by yourself, friends or family – this would be considered private use.

Expenses you can claim as a tax deduction include:
  • Real estate/Property management fees
  • Maintenance and repairs costs
  • Insurance costs
  • Pest control
  • Yard maintenance costs
  • Advertising costs
  • Cleaning costs
  • Council rates
  • Interest on the loan to purchase the house
  • Depreciating assets

You may also claim travel costs when travelling to and from the holiday house when inspecting or making any renovations or repairs. However, it is important to remember you still cannot claim travel costs or repairs while holidaying yourself. This would still be considered private travel and is not a legitimate tax deduction.

Record Keeping

Keeping correct documents, receipts and records for the ATO is as essential as lodging your tax return on time. If you are making income expense claims on your tax return, legally you need to keep your records for 5 years. The ATO also has a record keeping tool on the ATO app if you’re not the best at keeping all of your receipts in one place. Otherwise, a display folder or an old shoebox does the trick!


If you would like to know any more information about your holiday home obligations, or anything else tax-related, Contact the team at Online Tax Return today!