Whether it’s a lazy lakeside house or a dreamy beachfront cottage, the appeal of a holiday home can’t be denied.
Holiday homes offer the flexibility of a convenient weekend getaway with the bonus of rental income if you plan on short-term holiday letting.
If the warmer weather has you considering buying a holiday rental property, there are a few important things to consider before signing on the dotted line.
While it may be easy to fall for a secluded property with no neighbours or town for miles, this isn’t a wise choice if you plan on renting it out.
Proximity to the beach or main attraction of the area and the local grocery store are must-haves for convenience driven travellers. Look at potential properties from a traveller’s perspective. If you are spending your summer vacation at a small, coastal town where the main drawcard is the beach, a property located twenty minutes inland won’t appeal to most travellers.
Before buying a holiday home, ensure you do your due diligence and opt for an area that has consistent rental demand throughout the year. This way, you can best avoid long periods of vacancy.
Consider where you will list your holiday home when you wish to rent it out. You can choose to go through a real estate agency or list your property on a homestay website such as Airbnb. If you plan on using Airbnb to advertise your holiday home, make sure you read up on the local rules governing the conditions of short-term holiday letting.
In New South Wales, recent legislation means that residences in Greater Sydney can be used for short-term holiday letting up to 180 days per year if the host is not present. In all other areas of New South Wales, properties can be used for letting 365 days per year. However, local councils have the power to decrease this to no less than 180 days per year.
Owners can claim depreciation deductions on their holiday homes for the period that they are available for rent. You can’t claim depreciation for the times you are living at the property.
Don’t assume that because you are personally using the property at times throughout the year, you can’t claim depreciation. This is a costly mistake to make as depreciation can save owners thousands each year, making a holiday home significantly more affordable to own.
It’s crucial that holiday rental owners engage specialist Quantity Surveyors to prepare a tax depreciation schedule in order to claim depreciation. BMT Tax Depreciation can tailor your schedule to your individual circumstances to capture all deductions for the time your property is available for rent.
Before buying a holiday rental property, contact the expert team at BMT on 1300 728 726 so you can make a more informed decision about the most suitable property for you.