Mixed-use assets are holiday homes, boats and aircraft with both private and business use. You need to work out how much private and business 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.
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.
Opting out of the mixed-use assets rules
You can choose to leave out income or expenses relating to your asset from your income tax and GST returns when:
- your income from income-earning use is less than $4,000 for the tax year. This does not include private use.
- you have quarantined expenditure - losses held over to a future tax year to offset against the asset's future profits. You cannot use the quarantine rules with some assets.
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. 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.