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Claiming deductions for mixed-used assets

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Types of mixed-use expenses

Fully deductible expenses

You can claim deductions for 100% of any expense that relates solely to the income-earning use of the asset. For example, costs of advertising for guests for your holiday home, costs of repairs when your boat was damaged during a charter trip.

Non-deductible expenses

You can't claim any expenses that relate to private use of the asset. For example, costs of a quad bike stored in a locked garage and unavailable to the people renting your holiday home.

Apportioned expenses

If an expense relates to both income-earning use and private use, you need to apportion it between those two uses.

Private use of an asset

"Private use" of your mixed-use asset means use by:

  • you, your family or associated people, regardless of whether they pay you
  • non-associated people if they pay you less than 80% of market rates for the use of the asset.

Payment for private use is exempt income. Expenses relating to private use are not deductible.

Income-earning use

"Income-earning use" means use by a non-associated person who pays you 80% or more of market rates for the use of the asset.

Income-earning days include any days you spend either occupying or using the asset to:

  • repair damage to the asset, provided the damage occurred on an income-earning day
  • relocate the asset, provided you're paid to do so.