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18 Dec 2019

Airbnb Tax Rules in Australia

Just as Uber rocked the taxi world, Airbnb has redefined how we find our home away from home.

No longer just for brazen, barefooted, couch-surfing backpackers, Airbnb is now the first port of call for many travellers and weekenders when looking to secure anything from a luxury seaside home to a trendy inner-city apartment.

Monitoring website ‘Inside Airbnb’ reported an 87% increase in the number of homes listed on Airbnb in Australia from 2017 to 2018 with more than 12,000 entire homes available for booking in Melbourne last year.[1]

Increasingly, homeowners from across the country are looking for innovative ways to make some extra cash from their property. Others are converting garages to studio apartments while others are opting to rent their holiday home that would otherwise sit vacant for most of the year.

And then there are those who are moving out to make some extra cash over the busy holiday periods. This of course generally only works for those of us who are lucky enough to live in a desirable location. In fact, a friend of Ipsum’s who’s fortunate enough to live in the quaint seaside village of Anglesea did just this over the Christmas and Easter period earning enough money to cover their son’s first year of accommodation at college.

Tempted?

Before you rush off to lock away your dearest possessions and start scripting your home’s holiday pitch, make sure you first understand the tax rules.

It’s important to note, the following tax implications apply regardless of whether you’re just listing a room or an entire property.

Capital Gains Tax

Generally, the family home is exempt from Capital Gains Tax however if you are renting your home, even just partially, you may be hit with CGT if you decide to sell.

Income Tax

You must declare all gross income when it comes time to do your return. It’s important to note, this will include more than you pocket and will include booking fees taken by Airbnb along with any other associated fees you on charge to the guest including cleaning.

Goods and Services Tax

Resident rental properties are exempt from GST

Deductions

Depending on how frequently your place is rented, you may be entitled to the following deductions:

    1. Depreciation on furniture
    2. Utilities
    3. Interest on the mortgage
    4. Repairs and maintenance
    5. Advertising and promotion

 

If the property is 100% available for rent and there is no private use or below market related party use then these expenses are fully deductible as incurred or over the life of the asset for depreciation.

The are many ‘grey’ areas when it comes to the peer-to-peer sector of accommodation-sharing. One thing is for sure, the ATO has cracked down on those using the platform under declaring or not declaring the additional income.

And if you are going down this path, make sure you keep good records!

[1] https://www.abc.net.au/news/2018-02-23/entire-homes-commercial-listings-have-surged-on-airbnb/9473368