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Standard tax rules for holiday homes

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If the standard tax rules apply to your holiday home, money you receive from paying guests will generally be income and you need to declare these amounts in your tax return.

If you do not charge family or friends rent, but they make minor contributions towards expenses, those contributions will not be income. An example of this is if they give you $20 to cover power usage.

Expenses you can deduct

Expenses that relate only to earning the rental income can be fully deducted against the rental income. This includes the costs of:

  • advertising for guests     
  • cleaning costs for the rental periods.

Expenses that relate to both income-earning use and private use are only partly deductible and need to be apportioned. This includes costs like:

  • utility bills
  • mortgage interest paid
  • insurance
  • rates.

You cannot deduct expenses that only relate to the private use of your holiday home.