Buying a Holiday Home: Tips and Tricks
Covid-19 has forced us to explore our own ‘backyard’ in 2020 and re-think our plans to travel overseas. As we rediscover the joys of a traditional Aussie holiday, many of us have been left dreaming of buying a holiday home and making the most of this beautiful part of the world. However, if this is you, before you head into the real estate office it is worth thinking through the practicalities of buying a holiday home, and what it might mean in the long term!
Things to consider when buying a holiday home
It is important to consider all of the costs associated with buying a holiday home. If you’ve taken out a mortgage to purchase the property you will obviously have to cover the monthly repayments but there are some additional costs you will need to budget for:
- Monthly rates, including council, water and electricity.
- Ongoing repairs.
- Maintenance and wear and tear.
If you plan on renting out your holiday home when you are not using it to earn an income, or just to help offset the mortgage, there will also be costs such as:
- Advertising and marketing the holiday home.
- Tenant management fees if you go with a local real estate agent or online platform.
- Cleaning costs and replacement of household items.
Potential Tax Implications
If you decide to rent out your holiday home (either through a local agent or on platforms such as Air B’n’B or Stayz), you may be entitled to claim certain tax deductions. According to the ATO, you are only entitled to claim deductions “for periods when the holiday home is rented out or is genuinely available for rent”. This means that you need to keep accurate records of when your property is rented, or listed for rent, in order to make an honest claim in your tax return.
When it is rented, you may be able to claim deductions for:
- Interest on the loan for your property.
- Insurance costs.
- Your real estate agent’s commission for letting the property.
- Depreciation of your assets.
- Capital works or improvements.
You also need to be aware that the property may be subject to Capital Gains Tax (CGT) when you sell it if it is not your principal place of residence.
Appointing an accountant will help to ensure that your tax obligations are covered, and that you are not hit with any nasty surprises down the track!
How can we help you?
If you are interested in buying a holiday home, our experienced property team will be able to guide you through the process – wherever the house is located. We can provide advice and assistance with the purchase transaction, including reviewing the Contract and negotiating with the vendors on your behalf.
We will also conduct all of the necessary title and Council searches to make sure you are aware of potential issues, both now and in the future.
Research is key, particularly when you are not living in the area, so speak to one of our team members who can help you with the information you need to make sure your purchase runs as smoothly as possible. Call CDQ on 02 8556 0130 for advice todayBack