Depreciation on a part-year holiday rental
A holiday home that is only rented for part of the year can still generate significant tax depreciation deductions — the key is calculating the correct apportionment and ensuring that the periods claimed represent genuine rental or availability for rental.
What you can claim
Deductions are available for the portion of the year the property is:
You cannot claim deductions for:
- Periods of your own personal use
- Periods you block for family or friends at no charge
- Periods when the property is not listed for rent
- Periods when it is listed at inflated rates that deter genuine enquiry
Calculating your apportionment
Example scenario: A holiday home on the coast, owned for the full financial year:
- Rented to guests: 80 days
- Available and listed (no bookings but genuinely listed): 120 days
- Used personally (owner and family): 90 days
- Off-market (property manager winter shutdown): 75 days
If annual depreciation is $8,000: deductible amount = $4,384
The "genuinely available" test
The ATO scrutinises whether holiday properties are genuinely available for rent during periods the owner is not using them. Evidence of genuine availability includes:
- Active listing on Airbnb, Stayz, or other platforms
- Realistic pricing comparable to similar properties
- No unreasonable restrictions on booking periods
- Response to genuine enquiries
Division 43 and Division 40 apportionment
Both Division 43 capital works and Division 40 plant and equipment are subject to the same apportionment. Your quantity surveyor provides the full-year figures; your accountant applies the rental use percentage.
Year-by-year variation
The apportionment changes each year based on actual rental and private use. Your accountant should recalculate the deductible proportion each year using your booking and diary records.