A guide to owning a holiday home in Australia.

Ever dreamt of waking up in a cosy mountain retreat or a beach shack overlooking the ocean - and calling it your own? Sounds pretty good, right?

Whether you’re chasing a sea change, a tree change, or just a spot to unwind, buying a holiday home can be a great way to diversify your property portfolio and create your own escape. But before you dive in, there are a few things you’ll want to think about.

1) Plan how you’ll use it

Start by asking yourself: How often will I use this place? Your plans for personal use versus renting it out will make a big difference to your finances.

Keep in mind that peak holiday seasons - like summer for beachside homes - usually bring in the best rental returns. That might mean giving up your own summer getaway so you can cash in on those high-demand weeks.

Also, do your homework on whether holiday homes in the area rent out year-round or just seasonally. This will help you plan your income and budget for quieter times.

2) Research the market thoroughly

Like any property purchase, research is key.

• What’s the demand for holiday rentals in the area?
• Will you rely on seasonal crowds, and if so, how will you cover costs during off-peak times?
• Check for capital growth indicators - things like local amenities (shops, cafes, transport) and any planned infrastructure upgrades.

These factors can make a big difference to your property’s long-term value.

3) Understand local rules and regulations

Short-term rental rules vary across Australia. Some councils have restrictions, registration requirements, or limits on how long you can stay in the property yourself.

You might also need to meet standards for fire safety, noise control, parking, and more. In Victoria, for example, there’s a 7.5% short-stay levy on bookings under 28 days.

Bottom line: know the rules before you buy.

4) Get clear on the financial side

Owning a holiday home comes with ongoing costs like:

• Mortgage repayments
• Council rates
• Insurance (including public liability)
• Cleaning and maintenance fees

And don’t forget the tax implications. A few key points:

• Tax deductions: You can claim expenses related to earning rental income, but only for the time the property is genuinely available for rent.
   
• Negative gearing: If costs outweigh income, you may be able to offset losses against other income.
   
• Capital gains tax: You’ll likely pay CGT when you sell, though owning for more than 12 months can qualify you for a 50% discount.
   
• Stamp duty and land tax: These vary by state, so check what applies to you.

Chat with your accountant or financial planner to make sure you’re across everything.

Ready to make it happen?

If you’re ready to turn your holiday home dream into reality, FinancePath is here to help you every step of the way. From finding the right loan structure to making sure your investment works for you, we’ll guide you through the process with expert advice tailored to your goals.

Your dream holiday home is closer than you think. Book a free strategy session today!