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Tax Claim Tips for Airbnb Hosts in Australia

Airbnb is a great way to get involved in the sharing economy. The idea is to let travellers stay in your home for a fee, providing them with a more ‘local’ experience while you get to make some extra income. Alternatively, some homeowners let out their second properties when they aren’t in use.

However, any income you make through Airbnb is subject to taxation. Make sure you are getting your tax returns right by staying up to date with Airbnb tax regulations. This guide is here to help you figure out what you owe and what you can deduct.

Keep reading for some top tips on how to claim deductions on any Airbnb tax.

Do you pay tax on Airbnb income in Australia?

Yes, you must pay tax on all Airbnb income in Australia as it falls under short-term property rental. Other apps, like Stayz, also fall into this category.

The Australian Taxation Office (ATO) considers this taxable income that you must declare, so make sure you know how to fill out the proper forms. You should also be familiar with any allowable Airbnb tax deductions so that you don’t pay too much tax.

What tax deductions are Airbnb hosts allowed?

There are plenty of ways to deduct from your income tax on Airbnb rentals. Some of these are deductible in full, while others depend on how you use the property.

Here’s a list of possible allowable expenses:

  • Depreciation of furniture such as beds, tables, etc.
  • Repairs and maintenance
  • Cleaning cost for the area being rented
  • Costs associated with listing the property
  • Airbnb service fees

Notably, these expenses only apply to the areas used by a guest. So, if you rent out a single bedroom, then allowable expenses only apply to that one room. If you also live at the property, shared areas do not have the same deductions.

It’s important to note that the expenses only apply to the period when the property is available for rent. For example, if you rent out your second home for 100 days a year but occupy it yourself the rest of the year, you can only deduct taxes for the portion of time the property is available for rent, which in this case is 100 days.

The property does not need to be occupied by guests during this time, but it must be listed on Airbnb and available for rental.

Expenses for the whole property

Some expenses relate to the entire property. For example:

  • Mortgage interest or rent
  • Body corporate fees and charges
  • Council tax
  • Utilities like water or electricity
  • Insurance

However, you cannot deduct the entire amount from your tax expenses if you also live at the property. You will need to calculate the floor area used for renting and use this fraction as a proportion of the bill. 

For example, you cannot deduct your entire electricity bill from your taxes, but you can calculate the space used by your guest and use this to figure out how much of the bill is attributed to guest usage.

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Expenses for areas that are shared by guests and landlords

In shared areas, such as the kitchen, living room or dining room, you can deduct 50% of the expense. This includes the depreciation of furniture in shared areas, use of the internet, and may also include food, depending on how you run your Airbnb business.

Working this out can be complicated, but using accounting software can help you keep track of everything.

Tip: Maximise the space available to your guests to increase deductions. Try to expand the amount of space you designate as an Airbnb area, and make sure you keep personal items out of any shared rental zones.

Calculating expenses

The ATO has a guide on how to calculate your allowed expenses. For a rented room, the calculation is as follows:

(rented room size ÷ total size of unit) x (number of days rented ÷ total days in the year) x 100 = % of expenses claimable

You claim for 100% of the days rented. However, for common areas, you only claim 50% for the days the property is rented. The calculation is:

(total common areas ÷ total size of unit) x (number of days rented ÷ total days in the year) x 50% x 100 = % of expenses claimable

What about capital gains tax?

When you sell a property, the sale is usually free of capital gains tax (CGT). However, if you used the property (or part of it) for income, such as letting, part of the gains are taxable

Even if you stop renting a long time before you sell the property, you must still pay CGT, which is an implication you should consider before joining the sharing economy.

What about goods and services tax?

Luckily, Airbnb hosts don’t have to pay goods and services tax (GST). GST does not apply to residential lets, which means you are not liable to pay this on the rent even if your turnover from renting exceeds the GST threshold ($75,000).

On the flip side, this means you cannot claim GST credits for any costs associated with running the Airbnb.

How QuickBooks can help

When filing your tax return, accounting software can help make a difference. QuickBooks has a variety of tools for small business owners to use, including Airbnb hosts. The comprehensive features can help you manage your financial records, including automatic expense tracking when you connect to your bank.

Plus, with the QuickBooks Online mobile app, you can capture your receipts on the go and store them in your account. When tax time rolls around, having everything in one place helps you pay your Airbnb tax quickly and easily.

Sign up for QuickBooks today with a free 30-day trial to start streamlining your Airbnb tax deductions.

While every care has been taken to ensure the accuracy of the information presented as at 01 May 2023, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.


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