Updated June 2024

With interest rates, inflation and the general cost of living growing, many Australians are looking for new ways to earn extra income. 

One increasingly popular option is renting out your property (or part of it) through digital short-stay accommodation platforms like Airbnb, Home Away, or Flipkey.

If you’re considering this, it’s important to understand the tax consequences. In this article, we explain what you need to know.

Earning income via Airbnb and other short-stay platforms

Airbnb is a global platform where travellers pay to stay at someone’s home instead of a hotel. Since Airbnb was released in 2008, a range of similar short-stay accommodation platforms have entered the market, including Stayz, Flipkey and Home Away.

It’s important to note that rental income earned through Airbnb or similar platforms is typically assessable income and must be included in your tax return.

Can I claim tax deductions for short-stay rental expenses?

You can claim a tax deduction for expenses that directly relate to your rental income during the period your property was rented. These may include:

  • Advertising costs
  • Airbnb or other platform fees and commissions
  • Depreciation for furniture and fittings
  • Maintenance and cleaning costs
  • Repairs and maintenance to the property
  • Food amenities provided to guests, such as tea and coffee.

If you’re only renting out one or two rooms while using the rest of the home as your main residence, your tax deductions will be limited to the expenses incurred for the rented portion. This can be a bit tricky to calculate, but it’s usually determined by the percentage of the total living space that was rented.

What records should I keep when I rent out my home on Airbnb?

If you decide to rent out all or part of your home, you’ll need to keep records of all the income you’ve earned so that you can declare it in your tax return.

You’ll also need to keep records of all expenses so you can claim them as tax deductions to offset the income. 

Importantly, the Australian Taxation Office (ATO) may already have details of your rental arrangement through data matching, so it’s vital that you keep evidence supporting all your reported income and expenses in your tax return.

Will I be liable for capital gains tax (CGT) when I sell my property?

As a property owner, if you sell your home for a profit, you make a ‘capital gain’. This gain is assessable income and must be included in your tax return for the year you sell.

Usually, the sale of your main residence is exempt from CGT. However, if you’re renting out your entire property on Airbnb, the full main residence exemption only applies if:

  • the rental period since it ceased being your main residence didn’t exceed 6 continuous years before the sale
  • you didn’t have any other property as your main residence
  • the sale didn’t occur while you were a foreign resident for tax purposes.

If you’re only renting out part of your home and the above conditions aren’t met, you may only be entitled to a partial main residence exemption. The capital gain will need to be apportioned on a reasonable basis based on the period of ownership used for rental purposes and the portion of the property used for income-producing purposes.

CGT can be complex, so if you’re considering renting out your home, it’s important to get guidance from your advisor about the tax implications.

It is also worth noting that if you use Airbnb or other platforms to rent out all or part of a property you don’t own, CGT will not apply to you as it’s only applicable to the asset holder.

Do I need to pay GST on Airbnb rental income?

Rental income from Airbnb arrangements for residential properties generally doesn’t have GST implications (assuming you’re not running an Airbnb business). This means you don’t charge GST on the rent and can’t claim GST credits on expenses.

What’s the 7.5% Short Stay Levy?

On 20 September 2023, the Victorian Government announced a 7.5% levy on short-term accommodation platforms like Airbnb and Stayz, effective from 1 January 2024. This levy aims to make short-term stays more costly for landlords, encouraging them to consider longer-term rental returns.

This is the first levy of its kind in Australia, so it will be interesting to see if other states adopt similar measures after reviewing the impact of the Victorian levy.

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This article was written by Tax and Business Services Manager Michael Rebula.  

Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.