If you own a holiday home that you also rent out, the amount of private use now matters more when determining which expenses you can claim. This may be particularly relevant for medical professionals and other high-income households who own a holiday property that is also rented through Airbnb or another short-stay platform.
From 1 July 2026, updated rules applying to properties treated as a leisure facility — including holiday homes — can restrict deductions where the property is not used, or held for use, mainly to produce rental income.
That distinction can make a significant difference.
Traditionally, owners of holiday properties have been familiar with apportioning expenses between:
Under the rules applying from 1 July 2026, a threshold question is whether the holiday home is used or held mainly to earn rental income.
If it isn't, some of the major costs of owning the property may not be deductible at all.
These can include:
Certain expenses directly associated with earning rental income — such as booking commissions, advertising and cleaning after paying guests — may still be deductible.
Using the property yourself does not automatically mean the ownership expenses are lost.
Where the property is used mainly to produce rental income and private use is relatively minor — for example, a week or a few weekends during periods when there are no bookings — normal deduction rules can still apply, with expenses appropriately apportioned for the private-use periods.
The issue becomes more significant where the property is genuinely maintained as a family holiday home and renting it to guests is secondary.
This is particularly relevant if you:
The tax outcome can now depend more heavily on the actual pattern and purpose of use, rather than simply whether some rental income is earned.
If your holiday property has a mixture of rental and private use, it is worth reviewing how it has been used during the year and keeping clear records of:
Understanding the position early is much easier than trying to reconstruct the property's use when the tax return is being prepared.
We can help you work through how the property is being used and what that means for your tax position.
Talk to us before lodging your return or changing how the property is used.
General information only. The deductibility of property expenses depends on your individual circumstances and how the property is used or held for use.
Tommy Li, CA
Director, Verity Advisory | Registered Tax Agent | Authorised Financial Adviser (ASIC Rep No. 1261831) | Member, Chartered Accountants Australia & New Zealand
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Tommy is a Chartered Accountant with 20+ years advising medical professionals on tax, financial structure and practice ownership decisions. He founded Verity Advisory to provide integrated advice for doctors at career-defining financial inflection points — combining tax, lending and financial planning into a single structured approach.
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