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What Questions Will ATO Have About Your Vacation Home?

What Questions Will ATO Have About Your Vacation Home?

The ATO has published the preliminary questions they will ask to evaluate deduction claims from those who own vacation homes out of the concern that these individuals are claiming too much.

  • Is the rent reasonable given the number of days it was rented?
  • How and where do you find tenants? Are there any rules or regulations in place?
  • Have you or any of your friends or relatives ever stayed there?


The issue is claims that are made for the vacation property in its entirety, regardless of how long the residence was really rented. Expense allocation is necessary if:

  • You can only offer rentals during specific times of the year.
  • Part of the year, you use your property for personal reasons.
  • You are only renting out a portion of your property.
  • When you have family or friends staying at your place, you charge them less than the going rate.


The ATO has also suggested that deductions could be limited if a rental property is only made accessible outside of peak vacation seasons and is unlikely to be rented out during those times due to its location or other circumstances.

If the owner makes the property available for rent during the high season but receives no rent payments, the regulator is likely to be skeptical. This could mean that the rental rate listed was too high or that the home was actually being used for private reasons.

It is a matter of fact whether or not a given property is actually available for lease. In order to prove that a rental property is legitimately available, it must meet a number of criteria, such as being available during prime vacation times, being maintained in a way that would make people want to rent it, not unreasonably turning away tenants, being advertised in ways that give it broad exposure to potential tenants, and not having conditions so restrictive that tenants are unlikely to rent it.