A new draft ruling from the Australian Taxation Office may significantly reduce the deductions holiday home owners can claim against rental income from the property, limiting it to advertising, cleaning, and other costs directly related to earning the rent.

You cannot claim ownership costs such as rates, insurance, depreciation, interest, land tax, nor even repairs and maintenance, unless the property is “mainly” used to produce an income and is not held for private purposes.

If you can meet the ATO’s criteria of holding a property mainly to produce income but use it occasionally for a holiday, then the only restriction is that you cannot claim the portion of expenses and ownership costs that relates to the period of time you stay there.

There is no hard and fast rule on when a holiday

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