The Australian Tax Office (ATO) has begun to monitor tax deduction claims made for holiday rental properties much more closely, with the purpose of preventing excessive rental deduction claims. They have advised that they have sent letters to taxpayers in about 500 postcodes across Australia with regards to this issue.

Is my property eligible for tax deductions?

As a rental property owner, you are able to claim deductions provided that the property is genuinely available for rent. This means that your property does not fulfil any of the following criteria:

  • It is advertised in ways that limit its exposure to potential tenants
  • The accessibility and/or condition of the property is unreasonable
  • You do not place overly stringent and/or unreasonable conditions on renting out the property
  • Your reasons for refusing interested individuals are inadequate

Tips for deduction claims

You are able to claim expenses for your holiday rental property for any period it is being rented out or is genuinely available for rent.

  • If your property is rented out for only a portion of the year, the expense deductions must be divided accordingly to the time it has been rented out.
  • If your property is being rented to family or friends at prices that are below the market rate, your deduction claims will also need to be at that reduced level.

Furthermore, the ATO advises property owners to keep documents relating to the expenses claimed in order to provide accurate submissions, and be a source of evidence for any questionable deduction claims.

If you have received a letter from the ATO regarding this matter, or simply require any further information in relation to the article above, the team at The Quinn Group can help. Contact us on 02 9223 9166 or submit an online enquiry.