"Mixing business with pleasure"- Managed resorts and the tax implications?

[THEHEATH]

Hi guys. A quick one, I've found a little cabin at a place that also hires them out, with on site management etc. The advertisement reads "mix business with pleasure", referring to you being able to use it both as an investment property and then for personal use when not being rented out. Are there any special issues I need to be aware of with this type of arrangement? ie. I work FIFO, am thinking I could use the cabin on my week off. Am I able to rent the cabin out the weeks I'm away, claiming the interest as deductible and then when I come back make use of the cabin if it hasn't been rented out that week (obviously not making any deduction claim against the property loan interest incurred during the period of personal use)? Any other issues anyone can think of?

Thanks for your time
Cheers

 

[marg4000]

I guess it could work a little like a holiday unit where owners use the property for their own holidays and then rent it out to other holiday makers.

A lot would depend on the cabin and where it is, and also if there is short-term rental demand for it. So long as you could get income then I can't see any problem.

I remember years ago the ATO clamped down on people who used a property during prime times then claimed for rental during the "off" season and deducted proportional expenses. The example given was a ski lodge, where the owner used it for the three winter months, then claimed 3/4 deductions by making it available for rent during the other seasons, when obviously the demand and rent received was dramatically less.

An accountant should be able to give you accurate advice.
Marg

 

[THEHEATH]

Anyone else know for sure?

 

[Pushka]

We used to own an Apartment in Noosa, that was mainly rented out to holiday makers, but a couple of times we stayed there. We had to deduct the amount we used it, as a percentage, against costs. www.frenchquarter.com.au
We would only stay for a few days a year, so it really had no impact on it as an investment property. It also meant we could claim a percentage of our flights (from Adelaide) and accommodation (when we didnt stay in our apartment) as a cost for inspection, meeting with the property managers, real estate agents etc! That was a bonus but we did keep a diary for those purposes!

 

[nonrecourse]

Mixing business with pleasure is not a good idea. You will need to document the time its off market for personal use. The tax office will see a drop in taxable income due to the slow down so they will be looking at people who mix personal expenses with business

 

[Peter_Tersteeg]

You could always have it constantly available for rent and get the normal deductions (as per any rental property you own).

When you go on holidays, stay in the same resort if you like, but not in the same apartment. This way you don't effect the deductibility of your apartment and you don't loose any income by being there yourself.

As an added bonus, you may be able to claim part of your holiday costs as you're doing 'inspections' on your rental property (definitely check with your accountant to structure this appropriately).