All Topics / Help Needed! / Tax implications of living in short term rental IP for a holiday?

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  • Profile photo of andy2009andy2009
    Participant
    @andy2009
    Join Date: 2009
    Post Count: 10

    Hi Guys,

    Long time reader, 2nd time poster.

    Could anyone shed any light on the tax implications of living in an IP for a short period of time, approximatley two weeks p.a. The scenario would be purchasing a short term rental IP on Gold Coast, QLD and using it for holidays when it is vacant. Will the loan still be 100% tax deductable?

    Any other remarks on short term rentals are welcome too.

    Cheers,
    Andrew

    Profile photo of freelancefreelance
    Member
    @freelance
    Join Date: 2008
    Post Count: 93

    Hi Andrew,

    I recently read that you need to be careful buying an IP that would also act as a holiday home for yourself.

    The reason being that if your IP is only an ideal place for tenants looking for a holiday home then you're essentially going to increase vacancy rates by using it yourself. Say for example that demand for the property was high in the summer (considering it's on the Gold Coast). You'd probably want to stay there during the summer yourself, thereby losing a prospective tenant.

    You'll have to be pretty comfortable with that fact before you buy.

    Cheers

    Profile photo of LinarLinar
    Member
    @linar
    Join Date: 2004
    Post Count: 567

    Hi Andrew

    I'm not an accountant but I think that your deductions will be reduced by 2/52.

    Cheers

    K

    Profile photo of Dan42Dan42
    Member
    @dan42
    Join Date: 2008
    Post Count: 619

    The deductions are reduced by the amount of time the property is not available for rent. In your example, the deductions would be reduced by your private use amount of 2 weeks use/52 weeks, or 3.8%.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    This is subject to the rate being applicable for the whole year. If you used it in a peak period, the % adjustment would be much greater.

    Profile photo of C2C2
    Participant
    @c2
    Join Date: 2002
    Post Count: 518

    If only using it when vacant then you may be able to claim deductions for travel expenses as long as you justify a reason such as inspections or maintenance.  I plan my trips back to oz normally around end of leases when tenants are thinking of moving out and ask the pm to let prospective tenants know the place is available after I've been.  This also allows time to get a feel for the area and do any odd jobs that might help improve the place and increase rent further.

Viewing 6 posts - 1 through 6 (of 6 total)

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