Key Takeaways
Lenders usually count only part of your expected short-stay income, and some will not count it until you have a track record.
Seasonal demand around Lake Hume, the Murray and the alpine region makes income less predictable in a lender's eyes.
Victoria's 7.5% short stay levy and NSW registration rules affect how you run and budget for a short-stay property.
From 1 July 2026, holding costs such as interest are only deductible if the property is mainly used to earn rent, so blocking out peak periods for family use can cost you deductions.
A weekender on the lake or a cabin near the snow is a dream for many Border families, and renting it out when you are not there can help cover the costs. The catch is that lenders and the tax office treat short-stay income differently from a standard lease.
That does not put a lake house out of reach. It just means planning around how lenders and the tax office will see your rental income, and a holiday home loan broker can show you how different lenders are likely to count it.
Ways to Use a Holiday Home
Lenders and the tax office both start with how you will use the property, which usually falls into one of four types:
Private holiday home, used only by your family with no rental income.
Mixed use, with your own stays plus short-stay bookings when you are away.
Full short-stay rental, run mainly as holiday accommodation.
Long-term rental, with a tenant on a standard lease.
A private holiday home is assessed on your existing income alone. Once rental income is part of the plan, the lender has to decide how much of it to trust.
How Lenders Assess Short-Stay Income
Short-stay income moves with the seasons, school holidays and events, so lenders take a cautious view of it in three areas:
Income Shading
Most lenders count only a percentage of rental income when working out your borrowing power, a practice called shading. Short-stay income is often shaded more heavily than standard rent, and the exact amount varies between lenders. Because a rented holiday home is usually assessed as an investment property, an investment loan broker can compare how heavily each lender shades that income before you apply.
Booking History
Many lenders will not count projected short-stay income on a property you have not yet bought. Instead, they may use a long-term rental appraisal from a local agent. Once the property has a history, lenders may look at 12 to 24 months of booking statements and tax returns.
Income Documents
Booking platform statements or a property manager's income summary.
Tax returns showing the rental income declared.
A long-term rental appraisal as a fallback figure.
Requirements vary between lenders, so treat this list as a general guide.
How the Property Affects Your Loan
Holiday markets can be smaller and slower to sell, so lenders look closely at the property itself:
Serviced apartments and resort units often face tighter lending limits.
Small towns may attract a lower maximum loan-to-value ratio (LVR).
Bushfire and flood risk can affect insurance and valuation.
Owners corporation rules may limit short-stay letting.
Locally, we are seeing steady interest in homes around Lake Hume and the Murray towns for summer, and around Bright, Mount Beauty and the high country for autumn and winter. Each has a different peak season, which affects both your income and how a valuer views the market.
Short-Stay Rules in Victoria and New South Wales
The Border region spans Victoria and New South Wales (NSW), so the rules depend on which side of the Murray the property sits:
Victorian Levy
Victoria has charged a short stay levy since 1 January 2025. It is 7.5% of the total booking fee, including cleaning fees, on stays of less than 28 consecutive days, and the State Revenue Office (SRO) administers it. Booking platforms pay it on bookings made through them, while you register with the SRO and pay it on direct bookings. Your own home is exempt but a holiday home is not, so build the levy into your income forecast.
NSW Registration
Before you advertise a short-term rental in NSW, you need to register it on the NSW Planning Portal and show its property ID on every listing. It also needs to meet fire safety standards, and you agree to follow the mandatory code of conduct. Registration is renewed each year. Regional councils can cap non-hosted bookings at between 180 and 365 days a year. Day limits are under review in parts of the state, so check the current rules with the local council before you list.
Tax Deductions for Holiday Homes
Holding costs such as interest, rates and insurance are only deductible if the property is used, or held for use, mainly to earn rent. The Australian Taxation Office (ATO) set out this position in its updated holiday home guidance, finalised in May 2026 and applying from 1 July 2026. To decide whether your property qualifies, the ATO weighs up:
How the property is actually used across the year.
Time set aside for guests compared with time kept for family and friends.
Whether it is rented out during school holidays and peak seasons.
If the property passes this test, you usually apportion costs for the days your family uses it. Where it does not, holding costs are generally not deductible, although booking fees, advertising and cleaning after guests may still be. Your accountant can confirm how this applies before you buy.
How It Works for a Bellbridge Lake House
This scenario is a guide only.
Sam and Priya live in Wodonga and want a $500,000 lake house at Bellbridge, on the Victorian side of Lake Hume. They plan to use it on some weekends and list it for short stays in summer.
Their lender will not count projected short-stay income, so it uses a long-term rental appraisal, adjusted to part of that figure. They draw on equity in their Wodonga home for the deposit and costs. Their forecast also allows for the 7.5% Victorian levy on platform bookings and quieter winter months. Because they plan to leave summer free for guests, they check with their accountant whether the property is likely to count as mainly held for rent.
Frequently Asked Questions (FAQs)
Do I need a bigger deposit for a holiday home?
Not always. Many lenders treat a holiday home like any other residential purchase, so a 20% deposit usually avoids lenders mortgage insurance (LMI). Some holiday towns and property types attract lower maximum loan amounts, which can mean a bigger deposit. Serviced apartments and resort units are common examples. We can check lender limits for the specific property and postcode before you make an offer.
Is a holiday home loan different from an investment loan?
A holiday home loan is not a separate product so much as a way lenders label the purpose. If you mainly rent the property out, it will usually be treated as an investment loan. If it is mainly for your own use, some lenders treat it as a second residential property instead. In that case, a second home loan broker will focus on your existing income, as there is no rental income to count. The label can affect the interest rate, how rental income is counted and the documents required, so it pays to be clear from the start.
Bottom Line
A holiday home with short-stay income can work well, as long as the loan still stacks up without it. Before you make an offer, work out your repayments using a long-term rental appraisal and no short-stay income at all, so peak-season bookings become a bonus instead of something you rely on.
If you are weighing up a lake, river or alpine property, the team at Loan Street Finance can talk you through the options that suit your circumstances.
This article is general information only and does not take into account your objectives, financial situation or needs. You may wish to speak with a qualified professional, such as a broker, accountant or tax adviser, before acting.