What the ATO Looks For in 2025

If you own a holiday home in Australia and plan to claim tax deductions you need to understand what the ATO considers legitimate. Not all holiday homes qualify for full tax deductions, especially if they’re primarily used for personal holidays or only listed during peak times. Let’s break it down.

Modern Australian holiday home with ‘For Rent’ sign illustrating ATO rules for claiming tax deductions in 2025. Australian holiday home tax deductions 2025 ATO rental rules explained

Can You Claim Deductions for a Holiday Home?

Yes, but only if the home was genuinely available for rent. This means:

  • It was listed on popular rental platforms (e.g. Airbnb, Stayz)
  • The price was competitive for the area
  • The property was available for most of the year, not just holiday periods
  • It wasn’t reserved for private use or family/friends

When You Can’t Claim or Can Only Partially Claim

You can’t claim deductions for:

  • Periods the home was used privately (by you or friends)
  • Weeks when the property was unavailable for booking
  • If it was listed at an unreasonable rate (to deter actual bookings)
  • If the home was used for both private and rental use, you can only claim a proportion of the expenses

What Can You Claim?

If the holiday home qualifies, you can claim:

  • Mortgage interest
  • Council rates
  • Insurance
  • Repairs and maintenance
  • Property management fees
  • Depreciation on fixtures

What Records Should You Keep?

The ATO may ask for:

  • Booking calendars and ads
  • Rental income receipts
  • Utility bills and dates of personal use
  • Details of property availability

Good record-keeping = safe, stress-free deductions.

Final Tip: Don’t Fake Availability

The ATO actively audits properties that:

  • Are only listed during peak holiday seasons
  • Have little or no rental history but large expense claims
  • Were blocked out frequently for personal use

Conclusion

If you want to claim tax deductions on your holiday home, make sure it’s genuinely for rent and you can prove it. Need help calculating what you can claim this year? Book a free 15-min property tax check with Tax NextGen.