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Mixed-use assets are holiday homes, boats and aircraft with both private and income-earning use. You need to work out how much private and income-earning use each asset gets, as this decides how much income you declare and what expenses you can claim.

You have a mixed-use asset if during the tax year the asset is:

  • used for both private use and income-earning use
  • unused for 62 days or more. 

The rules apply to any:

  • property, regardless of cost price or current value
  • boat or aircraft which had a cost or market value of $50,000 or more when you bought it
  • additional item or accessory relating to the asset, for example a quad bike stored at a holiday home.

The rules do not apply to a:

  • residential property used for long-term rental
  • business asset where the private use is minor, for example once a year
  • home office where your expense claim is based on floor area
  • room in your home rented out for short-term stays.

These are known as excluded assets.

Mixed-use assets and GST

The mixed-use asset rules also apply to GST.

If you're GST-registered, you can claim GST on the percentage of expenses that relate to the asset's business use.

Learn more about the GST rules on mixed-use assets in the Tax Information Bulletin.

Tax Information Bulletin | Volume 25 No. 9 | October 2013

Opting out of the mixed-use assets rules

If you meet certain criteria, you can choose to leave out income and expenses relating to your asset from your income tax and GST returns. You can opt out if:

  • your gross rental income for the tax year from the income-earning use of the property is less than $4,000 or
  • you make a loss, and your gross rental income from income-earning use is less than 2% of the value of the property. In calculating this, use the rateable value or the purchase price if that is more recent (and if you didn’t buy the property from an associate).

The above exemptions don’t apply to holiday homes owned by companies.

Losses from renting out holiday homes

Your holiday home's income-earning expenses can be more than the rental income from it. This will result in a loss.

These rental losses mean you cannot deduct all apportioned expenses for that year. This will be the case if your gross income from the income-earning use is less than 2% of the holiday home's value (use the rateable value or the purchase price if that is more recent and if you didn’t buy the property from an associate). When this happens deduct your apportioned expenses up to the amount of the rental income. 

You’ll have to carry forward the deductions over and above the rental income you got from the holiday home. You'll then use them against income from your holiday home in a future tax year. 

Renting out a holiday home

Last updated: 06 Jan 2021
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