Aussie holiday home owners are facing the possibility of losing tax deductions under new ATO rules targeting properties not available for rent during peak seasons.
Chartered Accountants ANZ (CA ANZ) has flagged the possible changes to the taxation of holiday homes following a new draft guidance from the Australian Taxation Office (ATO).
From July 01 2026, certain holiday homes may be treated by the ATO as ‘leisure facilities’, preventing homeowners from claiming deductions for interest, rates or maintenance, unless the holiday home is mainly rented out to generate income.
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The proposed changes for holiday home owners may come into affect from July 01, 2026
According to Chartered Accountants ANZ, holiday homes in popular seasonal areas such as ski lodges or beach houses that are not available for rental throughout peak seasons, will trigger ATO attention and may result in the denial of deductions.
49 Ruskin St, Byron Bay listed for $1,800 per week with short term lease available
ATO interest may also focus on limited attempts to rent out properties, parts of the property being inaccessible for use by guests, pricing well above market rate to drive interest away from the property or renting to family or friends significantly below market rate.
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41/9 Easy Street, Byron Bay is listed for $800 per week with a four-month lease.
CA ANZ Australian tax leader Susan Franks said holiday homeowners need to look closely at these changes to ensure they are not caught off guard.
“Understanding the ATO’s proposed approach is essential for holiday homeowners. Staying informed now can help avoid compliance risks later,” Ms Franks said.
This Terrigal home is listed for $2,000 per week with short term options
“With the ATO tightening its approach, holiday homeowners need to be proactive.”
Ms Franks said to make sure your property is genuinely available for rent, especially in peak season, advertise widely, set a fair market rent and avoid restrictions that turn away guests, like ‘no children’, ‘no pets’ or ‘requiring references for short stays.
“Keep thorough records and, above all, talk to your Chartered Accountant about these changes to stay on the right side of tax rules,” she said.
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