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A couple having a look at their Airbnb room

Tax Claim Tips for Airbnb Hosts in Australia

April 23, 2024

If you have a spare room or own a second property that’s vacant but don’t want a long-term tenant, then property sharing platforms such as Airbnb and Stayz offer you a great way to get involved in the sharing economy. Travellers stay in your home and enjoy a more ‘local’ experience for a fee, while you make some extra income.

Whether it’s a room or an entire property being let out, the income made through Airbnb is taxable. This tax guide helps you figure this all out, from exactly what tax is owed, whether tax deductions are allowable and how these are calculated, as well as the low-down on two other relevant tax types - capital gains tax (CGT) and goods and services tax (GST). Let’s dig in!

Do you pay tax on Airbnb income in Australia?

If you rent out all or part of your home, payments you receive from guests are regarded as assessable income. You will be required to declare such income, which falls under the category of short-term property rental, in your tax return.

We recommend that you keep good records throughout the year, not only of how much you earn from your property rental but also, all the expenses you incur in providing this service. This ensures that you have less of a headache at tax time.

Additionally, becoming familiar with how to complete the proper forms and understanding the type of tax deductions that are allowable will ensure that you don’t end up paying more tax than you need to. Cloud-based accounting tools, like QuickBooks Self-Employed, can connect to your bank account from your mobile phone and assist you in separating personal expenses from business ones.

What tax deductions are Airbnb hosts allowed?

There are plenty of ways to make deductions from your income tax on Airbnb rentals. Some of these are deductible in full, while others may be partly deductible depending on how you use the property.

The Australian Taxation Office (ATO) outlines the type of rental expenses you may be able to claim. Typically, the type of expenses you can claim for renting a portion of the home are the same as those for a traditional rental property.

Allowable expenses include:

All the fees or commissions charged by the platform facilitator or administrator (examples include Airbnb or Stayz)
Interest on any loans you took for the property
Electricity and gas consumption
Property insurance purchased
Depreciation of furniture such as beds, tables, etc
Ongoing repairs and maintenance costs for the area being rented
Ongoing cleaning cost for the area being rented
Costs associated with listing the property

Renting out part of your home

The expenses listed above only apply to the areas used by a guest. The ATO advises that you should apportion your expenses based on the floor-area solely occupied by the guest, and add that to a reasonable amount based on your guest’s access to common areas of the property.

Renting out all of your home

Where you rent out the entire property and do not use it at all, you may claim 100% of its expenses. If it is a holiday home that you use occasionally, you claim expenses based on the proportion of the year it’s occupied or listed as available for rent.

It is important to note that if you live at the property, shared areas do not have the same deductions and expenses only apply to the period in which 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 expenses 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.

The amount that you can claim depends on several factors including:

the length of time per year that the property is rented out
the proportion of rental space with regards to the entire property
whether the space is taken for personal use during the times it is not rented out

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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 calculation to figure out how much of the bill is attributed to guest usage.

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 expenses. 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 provides a guide on how to calculate your allowable expenses.

Allowable expenses for a rented room

The calculation of allowable expenses 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 may claim for 100% of the days rented.

Allowable expenses for common areas of the property

You may 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

Do I pay capital gains tax?

When you sell a property which is your main residence, the sale is usually exempt from capital gains tax (CGT), which refers to the difference between what you pay for an asset and what you sell it for.

However, if you made the property (or part of it) available for rent and derived income from letting it out, a portion of the gains may be taxable. When you decide to sell your property, you may lose all or part of your CGT main residence exemption.

Even if you stop renting it out a long time before you sell the property, you must still pay CGT, which is an important factor to consider before joining the sharing economy. You may calculate the portion of your property that is exempt from CGT with the help of the ATO’s capital gains tax property exemption tool.

What about goods and services tax?

Luckily, Airbnb hosts don’t have to charge or pay the goods and services tax (GST), which is a value-added tax applied to the purchase price of certain goods or services. GST does not apply to residential lettings, which means you are not liable to pay GST on the rent earned, even if your turnover from renting exceeds the GST threshold of $75,000.

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

Preparing your tax return

Tax return lodgement

When you’re ready to lodge your tax return, contact your registered tax agent or consult a ProAdvisor for expert support. Alternatively, you may lodge your tax return online using the ATO’s MyTax platform.

Tax payments

When you earn over $4,000 per year in residential rental income, you may choose to make regular prepayments of the expected tax on your income, known as pay as you go (PAYG) instalments. This helps with your cash flow while also preventing nasty surprises at the end of the financial year.

Don’t worry if you end up paying too much or too little during the year - you’ll either get a windfall at the end or a reduced bill for the shortfall.

How QuickBooks can help

Renting out a room or your entire property through any of the property sharing apps available is a great way to supplement your existing income while benefiting from some property-related tax deductions.

With the help of cloud-based accounting systems such as QuickBooks Self-Employed that provide anytime, anywhere access, you will be able to manage your financial records, get paid faster, and automate recordkeeping and expense tracking like never before.

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. If you’d like a deeper dive into how to prepare for tax time, our guide to End of Financial Year offers a good starting point.

While every care has been taken to ensure the accuracy of the information presented as at 16 April 2024, 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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Tax Claim Tips for Airbnb Hosts in Australia

Do you pay tax on Airbnb income in Australia?

What tax deductions are Airbnb hosts allowed?

Renting out part of your home

Renting out all of your home

Grow Your Business with QuickBooks

Expenses for the whole property

Expenses for areas that are shared by guests and landlords

Calculating expenses

Allowable expenses for a rented room

Allowable expenses for common areas of the property

Do I pay capital gains tax?

What about goods and services tax?

Preparing your tax return

Tax return lodgement

Tax payments

How QuickBooks can help

Related Articles

Looking for something else?

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Help Me Choose

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Stay up-to-date with the latest small business insights and trends!