How do the mixed-use asset income tax rules apply to a dwelling that I sometimes rent out as short-stay accommodation and sometimes use privately?
The mixed-use asset rules apply in situations where assets are sometimes used privately, sometimes used to earn income, and are also unused for 62 days or more during the income year. The rules ensure that an appropriate proportion of the expenses that relate to the “unused” period is deductible. The proportion that’s deductible is based on the amount of income-earning use relative to the total use of the asset.
The mixed-use asset rules are explained in the QWBA, which covers:
- what rental income is taxable;
- what income is exempt; and
- what proportion of your expenses are tax deductible.
We recommend that you read our Short-stay accommodation overview to find the QWBA most relevant to your situation.