Depreciation on a property with mixed personal and rental use
If you use your investment property privately for any period — whether a holiday home, beach house, or a property you occasionally use yourself — you can only claim deductions (including depreciation) for the proportion of time it is genuinely available for rent.
The ATO's position on mixed-use properties
The ATO requires that deductions be apportioned when a property is:
- Used as a holiday home that you also holiday in
- Rented out for part of the year but available to family or friends for other periods
- Occupied by you during renovation or between tenancies when it is not genuinely available for rent
How apportionment works
The most common method is time-based apportionment. If your property is rented (or genuinely available for rent) for 180 days of the year and used privately for 60 days, you can claim 75% of all deductions, including depreciation.
Example: Full-year depreciation: $12,000 Available for rent: 270 days out of 365 Claimable proportion: 270 ÷ 365 = 73.97% Deductible depreciation: $12,000 × 73.97% = $8,876
"Genuinely available for rent" matters
The ATO places significant weight on whether the property is genuinely available for rent when you are not using it. Simply listing it at an unreasonably high price or placing excessive restrictions on tenants does not count as genuine availability. The property must be advertised at market rates and accessible to the general public.
Holiday home trap
The ATO specifically audits holiday home deductions. If you use your beach house for six weeks over summer and "make it available for rent" for the rest of the year at a price nobody will pay, the ATO may disallow some or all of your deductions.
Getting your apportionment right
Your accountant will need a record of:
- Days actually rented
- Days you or family members used the property
- Periods when the property was being repaired or maintained (these may count as available)
- Any periods when the property was not listed for rent