The principles that apply to a rental property also apply to a holiday home if it is rented out.
If a taxpayer rents out their holiday home, they can claim expenses for the property based on the proportion of the income year it was rented out or was genuinely available for rent.
They must apportion their expenses if the property is used:
- for private purposes for part of the year – such as when they use it themselves, or allow their family, relatives or friends to use it free of charge; and
- by family or friends for part of the year and they are charged less than market rent.
If their holiday home is rented out to family, relatives or friends below market rates, their deductions are limited to the amount of rent received for that period.
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