Holiday Rental Tax Deduction Claims – ATO Warning

The ATO has issued a media release warning taxpayers not to make incorrect tax claims for rental properties, particularly holiday homes. Compliance is a problem in this area where deductions for holiday homes are claimed even if the property is not genuinely being rented out.

Home owners can only claim tax deductions for expenses made during a period when the home is rented out or genuinely available for rent. Property owners are advised that if they rent their property at a discounted rate, they can only claim deductions equal to the amount of rent charged.

Technology enhancements and extensive use of data is allowing the ATO to identify incorrect or suspicious claims.

Rental property owners, particularly those who rent out holiday homes, should declare all rental income and only claim deductions for periods that the property is genuinely available for rent and they should keep 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 that a property is genuinely available for rent.

See also -

https://www.ato.gov.au/Media-centre/Media-releases/Homing-in-on-holiday-homes/

https://www.ato.gov.au/General/Property/In-detail/Holiday-homes/

https://www.ato.gov.au/general/capital-gains-tax/your-home-and-other-real-estate/

https://www.ato.gov.au/General/Property/Your-home/Renting-out-part-or-all-of-your-home/

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If you have any questions -

  • Buying / Selling Holiday Home and how to account of income and expenses during rental periods, or any other related rental property questions, please feel free to contact Garry Wolnarek. Garry Wolnarek as principal of Umbrella Accountants has been advising clients on property tax advice for over 20 years, through a number of property cycles.

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