With the arrival of summer and the festive season, it can be a time of the year when property investors get caught up in the allure of holidays and want to buy a holiday home.
But investors should make sure they are thinking clearly when lifestyle investments are on the mind.
At this time of year the appeal of owning a holiday home and generating revenue from it can be strong.
Quantity surveyors and depreciation experts Washington Brown however warned against making poor holiday home investment decisions with a clouded mind.
“You may argue that the numbers stack up and it will be a cheap holiday place to visit. And at first glance, it might. Purchase price, stamp duty and mortgages offset by the rental income can make it look good in the halo of optimism that comes with the first flush of real estate lust,” they said on the SmartProperty Investment website.
Tyron Hyde from Washington Brown said if you do go ahead with a holiday home investment, you can make the most of your money by renting it out for most of the year to a third party and claim depreciation benefits at the same time.
“Holiday houses can be depreciated if they are rented out to a third party,” Mr Hyde said on SmartProperty Investor.
“As long as it’s available for rent most of the year, you can block out a two-week period over Christmas and claim the depreciation pro rata.”
“You are still entitled to that deduction regardless of how many weeks the property is actually rented out – as long as it was available for the full 50 weeks.”
Mr Hyde said it is becoming increasingly common to see investors buy holiday homes at close to or less than the cost of construction and he suggests ensuring that if you do go ahead with such an investment, you furnish the home to maximise the deductions.