CA ANZ issues warning over holiday home tax changes
Chartered Accountants ANZ (CA ANZ) has issued a reminder to Australian holiday homeowners to remain up-to-date ahead of proposed tax changes set to come into effect from 1 July.
From the start of the new financial year, the Australian Taxation Office (ATO) will consider certain holiday homes as “leisure facilities” which will prevent owners from claiming back interest, rates or maintenance unless the home is mainly rented to generate income.
In particular, such deductions may become unavailable with the new changes for holiday homes in popular seasonal areas that are not rented throughout peak periods.
According to CA ANZ, other points that the ATO may look out for include:
- Limited attempts to rent out the property;
- Parts of the property being inaccessible for use by guests;
- Pricing the property well above market rate to drive interest away from the property; and
- Renting the property to family or friends significantly below market rate.
“We all worked hard last year and deserve some downtime over the holiday period,” CA ANZ Tax Leader, Susan Franks, said.
“But by the end of January, we recommend those with holiday homes speak with their Chartered Accountant to understand how these proposed changes will impact their tax affairs.
“As the ATO zeros in on these properties, it’s essential that everyone knows their obligations.
“Make sure your property is genuinely available for rent, especially in peak season, advertise widely, set a fair market rent, and avoid restrictions that turn away guests, like ‘no children’, ‘no pets’ or requiring references for short stays.
“Keep thorough records and, reach out to your Chartered Accountant about these changes to stay on the right side of tax rules.”
Hasn’t this always been the case? What’s changing on 1 July?