Need advice on holiday rental versus long term Rental?

[missmonopoly]

Hi,

I have been a member of this forum for about 4 months and have found it very helpful in making me take the plunge and buy my first IP, Thanks for all the tips!

I would like to rent out my IP as a holiday rental in the summer months and a short term fully furnished rental (cheaper rates) during the winter months. The property is in a great location, only 400m to beach so should be easy to rent as a holiday house.

This will be run as a business as the property will not be used by us as a holiday house as we live close by.

We are leaning towards using it as a holiday rental as I have the time to manage it , market it and clean it and we would like to have access to the house in between guests to do slowly renovate the property.

I have a few questions and if anyone could help out I would really appreciate it.
Firstly:
Can I claim the cost of buying furniture, appliances ,etc to set up the house for guests?

I expect it will take about 1-2 months to tidy up the place and have it ready to rent. Can I claim the interest payments during this time as it won't be available for rent while we are working on it?

If I decide to renovate the kitchen, put in a pizza oven,patios, decking ,etc down the track will I be able to claim these as an expense?

Lastly, is there landlord insurance for holiday rentals?

Any advice would be greatly appreciated.

 

[srini]

Hi Miss Monopoly

Seeing as how you haven't received any replies, I'll take a stab at this. But, your accountant can confirm them.

Can I claim the cost of buying furniture, appliances ,etc to set up the house for guests?
Depends on the item/price. Some are depreciable, some can be claimed as tax deductions. Quantity Surveyor and Accountant can tell you which ones can be claimed and which ones need to be depreciated over time

I expect it will take about 1-2 months to tidy up the place and have it ready to rent. Can I claim the interest payments during this time as it won't be available for rent while we are working on it?
I would advertise it as being available, but make the start date to be 1-2 months as you need. That way if the tax man asks, your intention of renting it out is clear. Again accountant can confirm this

If I decide to renovate the kitchen, put in a pizza oven,patios, decking ,etc down the track will I be able to claim these as an expense?
Same as the 1st answer, depreciate or claim depending on the item/cost

Lastly, is there landlord insurance for holiday rentals?
Should be able to. Try to get some quotes from insurance companies. Most can do this online AAMI, RACV, CGU etc. Or you can call them and ask.


Hope this helps.

 

[missmonopoly]

Thanks for the info Srini !

 

[Mick C]

Yes you would be able to claim the Furniture and interest repayment, as long as your intention is for it to be an IP- end of the day you will need to show some sort of paper trail to point out that it's an IP.

So make sure you continuous advertise it on the market to be leased out, even when the property is not ready; just simply reject the offer or ask for a higher price ( if they accept the higher price... even better haha )

As srini mentioned, some goods can be depreciated another claimed as tax deductions; the ATO website has a list of common item for each one.

In term of insurance, most of the larger insurance providers do provide landlord insurance for holiday rental;
1. It's normally more expensive
2. If the home is vacant for more then 60 days, special conditions applies
3. A few of them do not insure against lost of rent or tenant dmg for holiday rentals


Regards
Michael