If you rent out your holiday home sometimes, you may have to pay tax on that income.
The IRD says you have a “mixed-use” holiday home if, during the tax year, you use it for:
- Private use, and
- Income-earning use, and
- It’s unoccupied for 62 days or more.
It is still private use if you receive rent from family members, or from non-family members who pay less than 80 percent of market rates.
The property becomes “income-earning” if you get rent from non-family members at 80 percent or more of market rates.
You can keep the property outside the tax system if it’s privately owned, and your income-earning revenue is less than $4,000 a year. But then you can’t claim any of your related expenses.
You can also remain outside the tax system if you make a loss, and your gross income from income-earning use is less than two percent of the property’s rateable value. If you make a loss from your mixed-use holiday home, there are rules around how and if that loss can be used.
Please contact us if you have any questions.