ATO Holiday Home Draft Guidance: What Property Owners Need to Know

In late 2025, the Australian Taxation Office (ATO) released draft guidance that represents a major shift in how the ATO approaches deductions for holiday homes. These changes significantly tighten the rules for owners who rent out their properties while also using them privately.  With a transitional compliance approach ending on 30 June, it’s key to review your compliance risk now. 

 

Key Changes at a Glance 

• The ATO will apply much stricter deduction rules – holding costs such as interest, council rates, land tax and repairs & maintenance may be denied in full if your property is considered a holiday home, not a genuine income producing asset.  

• Deductions will be allowed only when the property is mainly held to produce assessable income – a test that is based on a number of factors and not a definitive number of days test.  

• Property use that flags a property may be treated as a holiday home includes:  

• Availability over peak periods  

• Personal use by you, family or friends even if this is minimal 

• Providing the home to family or friends at discounted rent 

• Other availability issues including listing it with restrictive conditions, or setting rent well above market value 

• The Draft Taxation Ruling is for individual property owners, but this doesn’t mean holiday homes owned in other structures such as discretionary trusts will avoid ATO scrutiny  

 

How The Macro Group Can Help 

At The Macro Group, we’re here to make compliance clear, achievable and stress free. We help you: 

• Understand your obligations under the new guidance 

• Test different usage and rental scenarios 

• Structure your rental approach to remain compliant 

• Strengthen your documentation for ATO review 

 

Get Ahead of the Changes with The Macro Group 

The ATO’s new approach raises the bar — but with the right guidance, you can ensure your holiday home strategy is compliant, tax efficient and aligned with ATO expectations. 

Connect with us today to prepare confidently for the upcoming changes. We’re ready to help you turn complexity into clarity.