• TR 2025/D1 - Income tax: rental property income and deductions for individuals who are not in business
• PCG 2025/D6 - Apportionment of rental property deductions - ATO compliance approach
• PCG 2025/D7 - Application of section 26-50 of the Income Tax Assessment Act 1997 to holiday homes that you also rent out - ATO compliance approach.

The ATO will treat certain holiday homes as leisure facilities under section 26-50 of the Income Tax Assessment Act 1997. Leisure facilities owners cannot deduct expenses relating to ownership and use of the property (e.g. interest, council rates and maintenance) unless the holiday home is ‘mainly’ used to generate assessable income. 

Under TR 2025/D1, the ATO will take a nuanced approach to determine ‘mainly’ instead of just using the number of days a property is available to rent in a year. For holiday homes in popular seasonal areas, the ATO may deny deductions if the holiday homes is not available for rent during peak seasons. The draft PCGs contain other factors that will indicate that the holiday homes is not used mainly to earn rental income.

The ATO acknowledges that their views on section 26-50 have not previously been publicly expressed in relation to rental properties and have offered a transitional compliance approach. The ATO will not devote compliance resources to reviewing whether section 26-50 will apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025 to holiday homes.

Email the CA ANZ Tax Team to share feedback on the draft guidance by 23 January 2026.