Can you have a holiday and income?

Summer is here and many of us have been enjoying a well-deserved holiday.  If you regularly visit a particular location your thoughts may have turned to buying a holiday home, after all it should give you the best of both worlds – a place to stay when you want to get away and you can rent it out for some extra income when you’re not there!

holiday blogIt sounds like a great plan, holiday homes do have their advantages, after all they give you place to stay free of charge, but there are several things you need to think about if you are also intending to use it as an investment.

What to buy?

If you are looking for something that will appeal to other holiday makers you need to consider proximity to local attractions and the needs of prospective tenants.

For example in the South West region you want something that is close to the beach and amenities.  Heating and cooling are important and you may need room to park a boat or caravan.  Easy care gardens are important – you won’t be there to keep them looking nice and holiday tenants are not expected to focus on garden maintenance.  An outdoor entertaining area and BBQ are also a plus.

Speak to local real estate offices to see what is in demand in the area and what sort of rental income you might expect.  Remember that if demand is seasonal there may be months where you have no income at all.


If you are looking to buy a holiday home that you can also use, you will need to consider when you can actually have it for your personal use.  If you invest in a unit in a motel complex or hotel, you may find that it is not available at certain times.  Some places have strict rules on how often, and when, you can use the unit as it is needed for paying guests.  You may find it is not even available during the peak seasons when you would like to travel.

If you buy a private property you may also find it difficult to use.  If you have taken out a mortgage to buy the home you may want to rent it out to help cover costs.  Naturally it will be in greatest demand during peak holiday times, such as school holidays, and less so at other times.  You may need to adjust your travel schedule to make a holiday home a viable rental option.

Taking care of business

Management and upkeep of a holiday home can be difficult.  If you don’t live near your holiday rental you will definitely need someone to manage it – someone to make sure that tenants leave it clean, to have linen cleaned and replaced, and to check for maintenance issues.

Holiday rentals tend to come fully furnished and you are usually expected to supply towels, linen, crockery and cutlery etc.  At the minimum people may be willing to bring towels and sheets, but not kitchen and dining utensils.

At the end of each tenancy you will need to do an inventory – is anything broken or missing etc?  You may be replacing or fixing things on a regular basis and this is an ongoing cost.  The rental will also need to be cleaned between each set of tenants.

Holiday tenants have high service expectations and if you can’t provide what they are looking for you may find your home getting less and less business.  They want the property to be clean, in good condition and they expect certain things to be provided.  For example, if you have a gas BBQ, you should provide gas and if you have a traditional log fire or heater you are expected to provide wood and lighting equipment.


If you rent out your holiday home, any money received is income for tax purposes.  Similarly some expenses are tax deductions.  However you have to be wary of apportioning the expenses.  If you use the holiday home for your personal use you cannot claim expenditure for any of the time that relates to your use (or if you let family and friends also stay for free).  For example you cannot claim council rates for the full 12 months if you and your friends used the property for three months.  It is advisable to speak to an accountant regarding your obligations.

Having a holiday home can be a fantastic investment.  However you need to consider all avenues before making a purchase.