About Tyron Hyde
Tyron Hyde is the CEO of Washington Brown Quantity Surveyors. He is regarded as one of the industry's leading experts in property tax depreciation, is regularly quoted in the media & asked to speak at conferences.
Tyron hosts a podcast called "Ten with Ty" where he interviews Australia's most successful investors as a lasting legacy for his daughter and followers, teaching them how to build and maintain wealth.
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Tyron has a Degree in Construction Economics (UTS) and is a Fellow of the Australian Institute of Quantity Surveyors. He began his career at Washington Brown in 1993 as a wide-eyed intern looking for a break in the industry. Twenty eight years later, he is now the sole owner of Washington Brown Depreciation Pty. Ltd.
With his passion and knowledge of property depreciation, Tyron is a regular speaker at industry conferences and is often quoted in national media. He has also published numerous articles and books including his popular Keep Claiming It book.
Attention! If you have a holiday investment home, you will be interested in this.
The Australian Tax Office (ATO) has begun focusing on ‘holiday home’ investors to get you up to scratch on the current tax situation.
Why the sudden shift in focus?
This alteration in tactics is because of the ATO growing concerns with landlords and over-claiming on tax deductions for intervals when the property is not being rented.
The Australian Tax Office has stated they will send taxpayers letters in roughly 500 postcodes around Australia. To remind them to only claim on the deductions they are entitled to. This means only claiming for the duration the holiday house was rented out or genuinely available for rent.
What does genuinely available for rent entail, and how is it determined?
A property is genuinely available for rent if:
- The property is broadly advertised, providing the opportunity for a large exposure to potential tenants.
An absence of this crucial factor indicates that the owner does not have the genuine intention to make income from the property.
For example, if a property owner is only advertising their property at their workplace, it is generally not deemed ‘genuinely available for rent.
What steps can I take to ensure the property is ‘genuinely available for rent?
- List the property with more than one real estate agent-
This is useful in proving that the property is genuinely available for rent by opening your resources to as large an audience as possible.
- Record evidence for Holiday Home Depreciation Deductions
Keeping records of seasonal variations and reasons for price adjustments throughout the year is helpful.
Also, keep a record of advertisements you placed in newspapers, magazines, booking agencies, etc.
- Do not make too many restrictions-
Don’t restrict the property’s availability for private use during peak periods, and don’t create restrictions on a property’s availability on weekends.
Also, don’t place too many restrictions on the tenants in the property.
What deductions cannot be claimed under any circumstances? The following deductions cannot be claimed:
- The owner of the property is living in the investment property for private reasons
- The property is being occupied by friends or relatives of the owner at zero or minimal charge
There should be no reason you are not ATO compliant by sticking to these guidelines!
Vacation home rentals have become an excellent way for beginners to invest in property. Australia offers plenty of opportunities for holiday home owners in this area. However, you also need to know about holiday rental tax deductions in Australia.
More novice investors have gone the holiday rental property route in recent years. Which is understandable. The country is a popular tourist destination, making a holiday home a viable investment property. Australia offers ample opportunities for savvy investors.
Typically, your agent will oversee the day-to-day management of your holiday rental. This makes money that you wouldn’t normally spend on an investment property.
However, you can command higher rents in return and experience more significant capital growth. Better yet, you can take advantage of the Australian Taxation Office (ATO) tax incentives for homeowners of holiday rentals in their tax returns.
Of course, you must know how to get the most out of these tax deductions. This article shows you how.
Tip #1 – Save Your Receipts
Try avoiding falling into the trap of failing to keep track of your expenses. Thanks to post-holiday clean-ups, holiday homes often rack up more expenses, so it’s crucial to retain all your receipts. Failure to keep good records could cost you thousands of dollars in tax deductions.
Australia also has a reasonably rigid system to verify holiday home deductions. You place yourself at risk if you don’t keep your receipts and maintain accurate records. An ATO audit or review could result in the loss of money if your records don’t match your claims.
Keep receipts from when you rent out your holiday home separate from those related to personal use. This will prove invaluable, as you’ll discover below.
Tip #2 – Know When You Can Claim Holiday Rental Tax Deductions
Deductions for your holiday property may not always be claimable. For example, any period you live in the property is not eligible for holiday rental deductions. You can only claim when you make the property available for rent or when you have a tenant.
Why is this important? Many novices mistake of putting all the property’s expenses together when claiming their tax deductions. Australia treats personal expenses differently from tenant expenses. As a result, you have to separate your holiday rental deductions from your costs.
This issue comes to the fore if the ATO makes a query on your claim. You’ll need to prove when your expenses occurred to show that you haven’t claimed a personal expense as a holiday rental deduction. If you’re unable to, you may face several fines and tax penalties. Furthermore, you may end up repaying taxes from previous years too.
To see how much you could save on your investment property you can use our simple depreciation calculator for an accurate estimate.
Property Depreciation Calculator
Find out the potential return on a property
Tip #3 – Know What You Can Claim For
Again, the ATO has specific guidelines in place for holiday rental tax deductions. You can claim for the following:
- Any maintenance work needed for the property or the yard
- Cleaning costs
- Property insurance and other related insurance costs
- Pest control
- The cost of marketing the property
- Anybody corporate fees that you have to pay
- Interest on your home loan
- Council rates
- The depreciation of rental property assets, including capital works
Remember that you can only claim these deductions when renting the property out. As a result, you can’t make these claims if you stay in the home or have family or friends let the property. You also can’t claim these expenses when the property isn’t available for rent.
With that in mind, keep records of above mentioned expenses.
Get a Quantity Surveyor tax depreciation report; this will save you thousands of dollars over the property’s lifetime. The best way to find work out how you can save on taxes is by requesting a quick quote here:
Get a Quote
Tip #4 – Claim during Inspections and Repairs
You can no longer claim deductions when travelling to the property to inspect or repair its assets.
Be honest and rigorous in this process. Any costs you can relate to personal use shouldn’t be put into your holiday rental deductions. Trying to sneak them through may result in fines if the ATO catches you.