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Generally, you must declare any rental income you earn from a holiday home. You can claim your rental expenses against this rental income. The proportion of your expenses you can deduct depends on which tax rules apply. The tax rules can either be the:

  • mixed-use asset rules
  • the standard tax rules.

Working out which rules apply

The mixed-use asset rules apply when, over the income year, your holiday home was:

  • used privately
  • used to earn income
  • unoccupied for 62 days or more. 

Private use of your property includes use by:

  • you or your family, even if your family member pays rent
  • non-associated people for less than 80% of market rates.

Income-earning use is when you rent the property to a non-associated person at 80% or more of the market rate.

If you stay in your holiday home to repair damage caused by guests on income-earning days, your stay is also counted as 'income-earning'.

For GST, income-earning days includes all days any rent is received, no matter the percentage of market rate paid.

If your holiday home does not meet the requirements of the mixed-use asset rules, the standard tax rules will apply.