Ahead of the June long weekend, the ATO is warning homeowners to follow the rules when claiming deductions for holiday homes.
The Australian Tax Office has issued a warning to holiday-home owners that it is "paying close attention" to deductions claimed for rental properties in popular holiday locations.
Last year the ATO identified a large number of mistakes on deductions claimed for rental holiday homes, said Kath Anderson, assistant commissioner with the ATO.
Holiday home owners "can only claim tax deductions for expenses made during a period when the home is rented out or genuinely available for rent,” she explained
Property owners who rent their property at a discounted rate, or ‘mates rates', can only claim deductions equal to the amount of rent charged, she pointed out.
The ATO is using data to identify errors, said Anderson, which is "allowing us to identify incorrect or suspicious claims," she said.
“Property owners should be aware that incorrect rental property claims will not go unnoticed," she claimed.
Rental property owners can claim deductions on expenses for their investment property when it’s rented out. And they can still claim a deduction if the property is genuinely available for rent.
How to make sure your holiday home is genuinely available for rent
Advertise in a way that maximises exposure to potential tenants, such as an online site. Advertising by word of mouth means your property may not be genuinely available for rent.
If your property is in a popular location, keep it well cared for. If your property is poorly cared for, or in a remote area, it is unlikely to be tenanted, and may not be classed as genuinely available for rent.
Charge the market rate. If you, your family or friends stay for free, your property will not meet the criteria during that time period. If the property is being tenanted for ‘mates’ rates’ then the allowable deductions are limited to the amount of rent charged, not market rates.
If you refuse to rent out your property to interested potential tenants without a good reason, the property might not meet the criteria of being genuinely available for rent.
Click here for more information about the ATO's policies on holiday homes.
Click here for more general information about the ATO's policies on rental properties.
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Rent your home, pay for your holiday