One of the most complex taxes of recent years was passed through Parliament late July and for most tax payers took effect from 1 April.

Known as the bach tax it reduces the level of deductible expenses that a holiday home owner can claim against the rent they derive from letting it out.

Historically a holiday home owner who rents their holiday home out has been able to claim deductions based on the time that it was available for rental with only the "private" family use time being non-deductible.

From 1 April 2013 deductions are only be available based on an apportionment between days rented or used for earning income and private use.

So, where as in the past, if the Bach was used by the family for 6 weeks, rented for 6 weeks (the national average time by the way) and "available" for the balance instead of the owner being entitled to a deduction for 88% of the costs the deduction will be limited to 50%.

The rule applies where the holiday home is not used for at least 62 days in a year.

Where the holiday home is used by the owner while repairing damage caused by a tenant the time is a deductible day.

If however the owner stays at the 'bach' to do general repairs (paint the exterior, mow the lawns etc) this time will be 'private' time.

The definition if private includes not only time the owner and family use the property but also includes any time when it is rented for less than 80% of the market rent. So allowing a friend to use the place for free or (say) $50 a night when you usually let it out for $200 a night is private use.

Direct costs of renting out the Bach such as advertising it on a website and cleaning up after a tenant remain fully deductible.

If you own a holiday home and make it available for rental you should be keeping a logbook recording its use each day of the year.

These rules will be extended to boats and aircraft from 1 April 2014. 

With the removal of depreciation from 1 April 2012 thischange adds further cost to holiday home ownership.