03/09/2026
🏠 Holiday Homes & Tax Deductions – ATO Guidance (TR 2026/1)
• A property is treated as a holiday home if it is used (or held for use) by you, your family or friends for holidays or recreation.
• Ownership expenses (interest, rates, body corporate fees, insurance, depreciation and capital works) are only deductible if the property is mainly used to produce rental income.
• If the property is not mainly a rental investment:
– Most ownership costs are not deductible.
– Only direct costs of earning rental income (such as advertising, cleaning after guests and booking fees or commissions) remain deductible.
• Even where the property is mainly income-producing, expenses must still be apportioned for any periods of private use.
• The ATO will consider:
– How the property is actually used.
– The amount of time it earns rental income compared with private use.
– Whether it is genuinely available for rent during peak periods (such as school holidays, public holidays and seasonal demand).
• Simply listing a property online is not enough. It must be genuinely available for rent on commercial terms with the intention of maximising rental income.
• The ATO has advised it will not devote compliance resources to expenses incurred before 1 July 2026.
