Owning and renting a property or holiday home

Renting out your property or holiday home

If you rent out property, you need to:

• keep records right from the start
• work out what expenses you can claim as deductions
• work out if you need to pay tax instalments throughout the year
• declare all rental-related income in your tax return
• consider the capital gains tax implications if you sell.

If you have an investment property that isn’t rented or available for rent, such as a holiday home, then you generally can’t claim deductions because it doesn’t generate rental income.

If you invest in (buy) a rental property or holiday home, you will need the date of purchase and costs of buying the property as part of your records. The date you enter into the contract is the purchase date (not the settlement date) for capital gains tax purposes.

Co-owning rental property

If you co-own the property you will need to know your ownership interest, to make sure you:

• keep the right records
• report the correct share of the rental income
• claim the correct amount for expenses you incur.

Buying a home

If you buy a home (your main residence), you should also keep records. You will need these records to make sure you don’t pay more tax than you need to, if you later decide to:

• make your residential property available for rent
• rent out all or part of your home through the sharing economy
• use all or part of your home to produce income.

Investment or business

Most rental activities are in the form of an investment. See, Rental property as investment or business, to work out if your activities amount to:

• carrying on a business
• a domestic arrangement
• sharing part of your home
• normal commercial practices.

If you are investing in property you intend to rent out as affordable housing, there are registration requirements and criteria you need to meet.

Foreign resident investors

If you are a foreign resident or a temporary resident and you plan to invest in residential rental property, you will first need to:

• apply for approval, pay the application fee and wait to be approved before you make a purchase
• keep the right records
• report the correct share of the rental income.

Talk to us if you have any questions.

Source: ato.gov.au June 2024
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/investments-and-assets/property-and-land/residential-rental-properties/owning-and-renting-a-property-or-holiday-home
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