The ATO flagged their changes to the rules around deductions for holiday homes late last year with a draft ruling that lobbed just before the holiday season. It created a bit of chatter, but Christmas holidays loomed, so nobody thought too deeply about it at the time. We’d best all do that now.

We’ll also ponder what happens when a provider of Depreciation Schedules closes up shop. And it’s not a hypothetical question, if the rumours in our industry prove true.

Now is also a good time to look at when it’s best for your clients to get a Depreciation Schedule – and it’s not in tax season. You can get the ball rolling now for your clients by making an enquiry via your booking link or make an enquiry online. 

Key Points:

1. 1. Short term rentals must be ‘mainly’ available to let in order to claim costs like depreciation.
2. 2. Can’t track down the original provider of a Depreciation Schedule? Get in touch with us – we can update Schedules from other providers.
3. 3. The best time to get a Depreciation Schedule is around settlement/handover. If the property needs inspecting, it’s often easier to get access to the property before tenants move in.

Short Term Rentals must be ‘mainly’ available to let.

You know the idiom ‘death by a thousand cuts’? It relates to an old Chinese torture (and is the name of a Taylor Swift song). 

In the torture context, small cuts are made that individually are not too bad (though perhaps messy). But the collective effect of those cuts is dire.

Owners of properties rented out short term have endured a few cuts of late, but this latest one for some might be the coup de grace.

An earlier cut was when the ATO instructed short term rental platforms to hand over details of payment records to landlords so the ATO could make sure the income was being declared. We have written about this before here.

Then some local councils started limiting the number of days a property could be available for short term rent. We’ve covered this before, also here.

Then there is this latest cruel cut: Draft Taxation Ruling TR 2025/D1.

Like all draft rulings, it’s a bit vague and will be tightened up. And there would be an invitation for people to provide input, but that’s usually just a veneer of appeasement.

In a nutshell, people will only be able to claim costs like interest payments, rates, insurance, depreciation etc if the property is ‘mainly’ available to let. The problem being that ‘mainly’ is up to interpretation. And like repairs vs improvements, clients’ perceptions will in many cases differ from the ATO’s.

If the property is not ‘mainly’ available to rent, clients will still need to declare the income, but they will only be able to deduct expenses like cleaning and advertising that relate to the rental period. Gone will be the possibility of claiming deduction for interest, council rates, depreciation etc.

And when push comes to shove, the onus will be on the client to prove the property was ‘mainly’ available to let and any private usage was incidental. If the client uses the property in peak holiday periods, they will not pass the ‘mainly’ test. 

Similarly, if the rent asked seems inordinately high, or pets and kids are not allowed, or internet is not provided. You get the idea.

The ATO has said that this will be a particular focus.

What happens when a Depreciation Schedule provider disappears?

We have had a number of clients getting in touch with us lately to have their Depreciation Schedules updated. We do updates all the time and don’t charge clients for the service. We have written about this previously here.

The twist of late is that the Depreciation Schedules we are being asked to update are not ones that we prepared initially. It seems a large provider has left the building – not answering their phones or replying to emails.

Most of the clients who have been in touch with us are fortunate in that they have copies of their Depreciation Schedules, but some don’t. And those Depreciation Schedules are likely gone forever. 

Small operators in our industry come and go all the time, but a larger one closing up abruptly is unusual.

We aren’t going anywhere, but if you have clients using other providers, make sure those Depreciation Schedules are somewhere safe. And if you or your client need them updated, chances are we’ll be the only ones who will do it.

When is the best time to get a Depreciation Schedule?

Clients often ask us when is the best time to get a Depreciation Schedule.

‘Now’, we tell them. And they respond and say, ‘Yeah. I thought you would say that. Why?’

It’s often around settlement/handover that people call us. Things like depreciation can be top of mind then, and it’s a good idea with this sort of thing to strike while the iron is hot.

Around settlement/handover, properties are usually vacant, and that makes things easier if a property needs to be inspected. (Of course, not all properties need to be inspected and we have written about this before here.) 

This is also the time when people might need to spend a bit of money on the property to get it ready to rent out and we can include those costs at the time rather than people having to recall things down the track.

Having a Depreciation Schedule prepared early is useful also when other expenses are incurred down the track – that’s where our free update service comes into its own.

Do you have a client you think might need a Depreciation Schedule? You can log a job here.

We’ll call them within the hour for a chat and work out if it’s worth doing a Depreciation Schedule. Then we will do it the most effective way possible and send you a copy. That way we’ll all have that particular job out of the way well before tax season. 

Enquire now for a property-specific assessment

Has this article reminded you about a client’s investment property? Residential properties, commercial properties, even farms, we do them all.

If you want us to talk to a client about a Depreciation Schedule, make a no-obligation enquiry and rely on our 20-plus years of experience in estimating depreciation returns.