The ATO is concerned that a large number of taxpayers are incorrectly claiming deductions for expenses relating to holiday homes which are not genuinely available for rent.

The ATO has issued further warnings indicating that it will be focusing on taxpayers who claim deductions for holiday homes that are not actually available for rent, or only available to friends and family.

Deductions can be claimed if the property is genuinely available for rent.

Deductions cannot be claimed for times when a taxpayer was using the holiday home for their own personal holidays or letting friends and family stay rent-free.

Also, if the holiday home is rented to friends and family at reduced rates, the owner can only claim deductions for expenses up to the amount of the income received.

The ATO is also focused on other times when a property is not rented or genuinely available for rent, noting that some taxpayers claim their property is available for rent, but when the ATO investigates, it is clear they have little intention of renting it out.

Clients should ensure that accurate records are kept of the income received from holiday homes, expenses incurred, and evidence of the property being rented or genuinely available for rent at market rates. Clients should also keep records of who stayed at the holiday home and when, including the time they or their family stay at the property.