Tax reminders for Airbnb hosts

With the on-going growth of the sharing economy and rising house prices in Australia, careful consideration of the tax implications of hosting your property on Airbnb or other platforms is crucial.

The short-term and long-term tax issues that should be considered before listing a property include:

• Any money earned from renting or hosting your property is assessable income, and must be included in your tax return each year. The ATO receive data from Airbnb and other platforms, and are constantly updating their data-sharing capabilities to be more sophisticated than ever, so it’s important to get this right.

• You can generally claim tax deductions for expenses directly related to earning this assessable income through the property hosting activities – such as mortgage interest, council rates, utilities, cleaning, repairs, depreciation for new assets, and of course the hosting fees incurred.

• If the property is only rented out for part of a year, or only one area is made available for rent, all expenses must be apportioned accordingly. For example if only one bedroom is rented out in a four bedroom house, then you can only claim one quarter of the relevant expenses for the period it was rented/available on a hosting platform.

• If the property is sold in the future, the capital gains tax (CGT) outcomes can differ, such as:

  • If the property was always an investment or purely used as an Airbnb or on another sharing platform for the full ownership period, and was never used as the owner’s main residence, then the entire sale will be subject to CGT.

  • If the property was also partly used as the owner’s main residence, or if it was originally their main residence and then later used as an Airbnb or investment property, then a CGT apportionment may be required with a partial main residence exemption also potentially available. There are circumstances where a full main residence CGT exemption can still be available when an investment property that was formerly a main residence is sold, however it depends on the individual circumstances and other facts of the property owner’s situation, and we would recommend obtaining advice on this matter whenever possible if deciding to make your main residence available for rent or before listing it on a sharing platform.

Please contact our office if you have any tax questions in regards to your property or require advice in regards to your specific circumstances.