Ask your Aspen advisor:
“We have a holiday place we rent out sometimes – will the new ATO approach treat it as a holiday home or a genuine investment property?”
If you own a coastal shack, a farm stay or a city apartment you list on Airbnb, you are very much on the ATO’s radar this year.
The ATO has released new guidance that looks closely at how holiday homes are used and why they are owned. The big question is simple: is this a genuine income-producing asset, or a lifestyle property that just happens to bring in a bit of rent?
The answer will drive how much you can actually claim at tax time.
Holiday home or investment property - what is the difference?
On paper, two properties might look identical: both are in popular locations, both are listed on booking sites and both have some rental income each year.
In practice, the ATO will look at things like:
- Is the property genuinely available for rent in peak periods, or blocked out for your own use?
- Is the nightly rate set at a commercial level, or so high (or low) that no one realistic would book it?
- Are photos, listings and responses to enquiries consistent with someone trying to maximise rental income?
- How much private use is there by you, family or friends, especially at prime times?
If the pattern looks more like “family weekender that occasionally pays its way”, the ATO is more likely to treat it as a holiday home. That usually means fewer deductions and tighter apportionment.
What happens to your deductions?
For a property the ATO sees as a genuine rental investment, you can normally claim a share of costs like:
- Interest on the loan
- Rates, insurance and utilities
- Repairs and maintenance
- Depreciation on eligible assets
Those costs need to be apportioned if there is any private use or if the property is not genuinely available to rent all year.
For a property that is really a lifestyle asset, the ATO may restrict claims to expenses that directly relate to the periods it is truly available and rented. In some cases, they may even treat large, ongoing losses as private in nature rather than deductible.
What should owners do now?
If you own a holiday property, this is a good time to:
- Look at your calendar – how many weeks each year are really available, and how many are blocked for private use?
- Review your listing – price, photos, house rules and response times all send signals about how serious you are about renting.
- Check whether the income and expense pattern makes sense for an investment, or looks more like a subsidised holiday.
Small changes – like opening up peak weeks, adjusting pricing or being more responsive to enquiries – can sometimes make a big difference to how the story looks on paper.
Final thought
Holiday homes are not off-limits. The ATO is simply asking: are you running this like a business or using it as a personal perk?
If you are not sure which side your property falls on, or you suspect past claims might not line up with the new guidance, talk to your Aspen advisor. We can review the numbers, the usage pattern and the listing, then help you decide what needs to change (if anything) before the next return.
