Published: November 2025
The ATO is stepping up enforcement of holiday home rules from 2025 onwards, ahead of new guidance proposed to apply from 1 July 2026.
With closer scrutiny on rental deductions and mixed-use properties, owners and bookkeepers need to act now to stay compliant. Owning a holiday home can be rewarding, but it comes with clear obligations under the holiday home tax rules in 2025. The ATO is focusing on properties used for both private holidays and income-producing purposes, making the distinction between personal use and genuine rental availability more critical than ever.
The ATO’s message is clear: tax deductions for holiday homes are only valid when the property is genuinely available for rent at market-aligned rates and is held mainly to produce rental income.
Simply listing the property isn’t enough if availability is limited, pricing is above market, or personal-use blocks reduce rental potential. Where genuine availability or the income-producing purpose is compromised, the ATO may deny part or all deductions.
ATO Holiday Home Rules: Key take-aways
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Genuine availability is essential: Deductions generally apply only for periods the home is genuinely available to rent or actually rented. Overpriced, restricted, or short listing windows can reduce deductible expenses such as loan interest, rates, cleaning, and maintenance.
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Detailed documentation is required: Owners should track advertising periods, bookings, private-use days, and property-manager communications. Bookkeepers may need to separate personal and income-producing days for accurate apportionment.
What owners should do now
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Review how your property is advertised.
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Ensure pricing aligns with the market, including in peak periods.
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Track private vs rental-use periods.
Even simple spreadsheets supported by booking data can meet ATO record-keeping expectations. Bookkeepers and advisors can proactively review clients’ records to reduce risks and ensure compliance under the updated holiday home tax rules in 2025 and beyond.
Stay ahead by building practical knowledge in managing deductions, apportioning expenses, and keeping audit-ready records. Our Tax Agent Registration Course and BAS Agent Registration Course provide Australia-focused training to help bookkeepers, advisors, and property owners confidently navigate holiday home tax compliance. Explore our courses today and ensure you or your clients remain fully compliant.
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Published: November 2025
