A mixed- use asset can only be land (including any dwellings), and boats and aircraft that cost in excess of $50,000. To be a mixed-use asset, the asset must be used by a person in an income year partly to derive income, partly for private purposes and not used for at least 62 days in the year.
It targets people who own a holiday home, boat or aircraft and use it for private purposes and also rent the asset to other users. Under the previous rules, the expenditure relating to the rental use was deductible as well as the expenses relating to the period when the asset sat idle but was “available for rental”.
In many cases, by renting what is otherwise a private asset, people were able to generate tax losses for the expenses incurred – particularly the expenses incurred when the asset was idle. It is those expenses that are the real target of the rules.
The rules apportion expenditure relating to the asset on the basis of income earning days as a porportion of both income earning days and private days.
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