Renting out a holiday home

What

Work out what tax there is to pay when you rent out, and use, a holiday home

When renting out a holiday home you must pay tax on your rental income.

To work out what tax you'll pay, take away your allowable rental expenses from your gross rental income. The method you use to see what these are depends on:

Holiday homes used privately and vacant for 62 days or more

You must use the mixed-use asset rules if your holiday home:

earned you rental income and was also used by you or an associated person (this is the mixed-use), and
was vacant for 62 days or more (being available for use does not count).

You use the actual cost method to work out what tax there is to pay on rental income from your holiday home if either it:

How you use the actual cost method depends on your use of the holiday home. If you rented it out and:

you did not use it privately, deduct all rental expenses from the rental income. You can do this for the time you rented it out and when it was available to rent.
you or an associated person used it privately, you need to work out what the expenses are from renting out only. You can only deduct these expenses to see what you'll pay tax on, not those for private use. The actual cost method shows you how to do this.

You cannot use the actual cost method if your holiday home is vacant for 62 days or more. You must use the mixed-use asset rules.

Residential rental income from renting out long-term is exempt from GST. You do not register, file or claim GST for your rental income and expenses.

Renting out short-term is a taxable activity for GST.

If you’re not already registered for GST, you need to:

If you’re renting out short-term and you're registered for GST you: