iscover CA ANZ urges holiday-home owners to brace for imminent tax changes
TaxThe professional accounting body put out new advice for holiday-home owners amid a looming novel tax ruling to come into effect from 1 July 2026 — urging owners to ‘know their obligations’.
On 12 November 2025 the ATO proposed a new draft ruling to replace the long standing IT 2167. The successive draft taxation ruling, TR2025/D1, will tighten the ability for holiday-home owners to make deduction claims through redefining certain holiday homes as “leisure facilities”.
Expenses for ‘leisure facilities’ non deductible
From 1 July 2026, this new ruling is proposed to declare holiday homes that are “mainly” used for personal purposes as “leisure facilities” — making expenses related to ownership and the personal use of the holiday home, such as mortgage interest rates, insurance, council rates, maintenance, and other holding costs non-deductible.
To be eligible for deduction claims, holiday-home owners must prove that their property is “mainly” used for income generation purposes.
In a statement, CA ANZ warned that holiday homes in popular seasonal areas such as ski lodges or beach houses which are unavailable for rent throughout peak seasons will trigger ATO attention and may result in the denial of deductions.
The accounting body said that holiday-home owners who make limited attempts to rent out their holiday properties, make parts of their holiday properties inaccessible for use by guests, price their property well above the market rental rate to drive interest away, and rent the property to family or friends well below the market rate must may have their property classified as a “leisure facility”.
‘Closely examine changes’
CA ANZ tax leader Susan Franks recommended that holiday-home owners closely examine the changes to avoid getting into “hot water” with the ATO.
Franks recommended that holiday homeowners speak with their accountants to understand the impacts that these proposed changes will have on their tax affairs, stating that it is “essential” that these owners “know their obligations”.
She emphasised that holiday-home owners must that their holiday homes are “genuinely available for rent” especially in peak seasons such as Christmas, New Year, Easter, public holiday long weekends and school holidays, set a fair market rent, and avoid restrictions that turn away guests like ‘no children’, ‘no pets’ or requiring references for short stays to ensure they can continue making deduction claims.She concluded: “Keep thorough records and, reach out to your Chartered Accountant about these changes to stay on the right side of tax rules.”
Feedback on the new draft tax ruling and PCGs is due by 30 January 2026.
