Join Australia's most dynamic and respected property investment community

Holiday Home - Tax Implications

Discussion in 'Accounting & Tax' started by tomb, 4th Aug, 2015.

  1. tomb

    tomb New Member

    Joined:
    22nd Jul, 2015
    Posts:
    2
    Location:
    Adelaide
    Hypothetical at this stage however;

    Say I buy a holiday home - lease it out on Stays/Airbnb etc for short term holiday rentals.

    Say I get occupancy for 50 days per year, and I occupy it for 30 days per year - the rest of the year empty.

    Can I claim all holding costs for 335 (365 - 30) days per year?

    Assume 3-4% worst case CG + top tax bracket deductions, and it seems like a relatively neutral proposition for a holiday home I could use on a whim?

    Am I missing something?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,970
    Location:
    Sydney
    Is it available for rent while you are not there and at market conditions?
     
  3. tomb

    tomb New Member

    Joined:
    22nd Jul, 2015
    Posts:
    2
    Location:
    Adelaide
    Yep - let's assume that it is always available for rent at market conditions, and I would only use it when it was not being rented..
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,358
    Location:
    Sydney
    Unlikely. The ATO have issued guidance on their view on leasing and rental and a offer on a website like Stayz Aibnb etc isn't sufficient. It must be unavailable for other use. One of the biggest obstacles to short term rents can be cleaning, linen and turnover services. Not just unused with a offer tacked up on the Woolworth supermarket Community board.

    The ATO view is you can claim a proportion for the actual days let. And its a high risk since Airbnb data is on the ATO radar for audit use. Overclaiming availability is a ATO audit focus.

    You also are missing the third element cost base issues which substantially reduce a holiday let from CGT if its not let. Also don't ignore land tax. Land tax can be the largest cost for a holiday house. They tend to be in well valued locations.

    Owning a holiday let is much like owning a boat. Nobody wants to use it but it costs you money every day.