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Holiday Home Tax Guide — Mixed-Use Assets, Deductions, and Bright-Line Rules in NZ

the holiday home tax rules in New Zealand. The guide covers the mixed-use asset rules for the homes used both privately and for the rental income, the expense apportionment based on the income days, the bright-line test application, and the GST registration for the short-stay accommodation.

Mixed-Use Asset Rules

The holiday home (the bach) is treated as the mixed-use asset when it is used for both the private purposes and the income-earning purposes (the rental). The mixed-use asset rules under the Income Tax Act 2007 require the apportionment of the expenses based on the number of the income days versus the total available days. The expenses must be allocated: (a) the variable expenses (the cleaning, the agent fees, the advertising) are fully deductible against the rental income, (b) the fixed expenses (the rates, the insurance, the interest) are apportioned based on the income days divided by the total available days, and (c) the private use portion is not deductible. The rules apply when the property is used for the income-earning for at least 62 days per year. See our Rental Income Guide → for the rental deduction rules.

Bright-Line Test and GST

The bright-line property test applies to the holiday homes as well — the sale within the bright-line period (2 years for the properties acquired from 1 July 2024) may be taxable. The short-stay holiday accommodation (the AirBnb, the Bookabach) may require the GST registration if the annual income exceeds the $60,000 threshold. The GST on the short-stay accommodation is charged at the 15% rate. The GST-registered owners may claim the input tax on the property expenses. See our Property Tax & Bright-Line Guide → and the GST Guide → for the full rules.