As summer approaches and you start dreaming of that holiday home you've always wanted…you might also wonder…can you claim depreciation on a holiday house?
The simple answer is yes, provided it is available to be rented out by a third party.
However, if your holiday house is for private use only and never leased…unfortunately you can’t claim depreciation on it.
But, if it's available for rent most of the year and then blocked out for a 2 week period over Xmas, then the depreciation is claimed pro rata. Eg you multiply a year's worth of deductions by 50 then divide by 52.
It's worth noting that you are still entitled to that deduction regardless of how many weeks the property is actually rented out, as long as it was available for the full 50 weeks (in this example).
From where I sit, buying a holiday home post GFC has never looked better in some parts of the country, particularly in areas like Noosa and Port Douglas.
These areas have really taken a beating and I’m seeing many clients buy holiday homes at close to or less than the construction cost.
And remember if you furnish your holiday home, you’ll magnify the deductions!
Tyron Hyde is a director of quantity surveying firm Washington Brown. For more QS Corner tips and information on property depreciation including a FREE online tax depreciation calculator, visit www.washingtonbrown.com.au
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.