AIRBNB – YOUR TAX OBLIGATIONS
Currently there are 115,000+ renters on Airbnb. You can rent out your house, apartment, a room or sublet your residence/property through the Airbnb app. Any income earned from renting property through Airbnb is assessable. Airbnb hosts are generally treated exactly the same way as anybody else who rents out property. In most cases, rental income and deductions will need to be reported on your annual tax return. Expenses incurred in running an Airbnb activity will also be deductible.
TYPICAL DEDUCTIONS THAT CAN BE CLAIMED
- Fees or commission charged by Airbnb
- Professional photography costs
- Food made available to guests (eg Breakfast provisions)
- Council rates*
- Interest on a loan for the property*
- Electricity, gas and water*
- Property insurance*
- Cleaning and maintenance costs (products used or hiring a commercial cleaner)*
- Internet fees*
- Depreciation on any assets used in your property
- Furniture, such as beds, sofas, tables*
- Technology such as TV’s, radios, air conditioners*
- Equipment used to make bookings and contact guests such as computer, mobile phone, printer*
- Relevant proportion of capital works deductions (based on floor area)*
(* Rental element only)
CLAIMING DEDUCTIONS WHEN RENTING PART OF THE PROPERTY
If renting part of the home, for example a single room, expenses can only be claimed with relate to renting out that part of the house. The easiest method is to use a floor-area basis based on the area solely occupied by the renter, and add to that a reasonable amount based on their access to common areas such as the lounge, kitchen, balcony, etc
A deduction can only be claimed for periods when the room is actually rented. If the room is only rented for two weeks in a year, a claim can only be made for the proportion of expenses for the rented part of the property which relate to that two week period. Unlike when you rent out the whole property, deductions can be claimed for periods when the property is available to rent, it is not required that the property is actually rented.
100% of expenses can be claimed that relate only to renting out the room to guests, such as Airbnb fees and commissions.
NOTE: From 1 July 2017 rental property owners can no longer claim:
- Travel expenses relating to residential investment properties, including inspecting and maintaining residential investment properties.
- Plant and equipment depreciation deductions will be limited to outlays actually incurred by real estate property investors – property owners will be unable to claim deductions or plant and equipment purchased by a previous owner of the property.
GST
If a room or a whole house is rented out, there is no liability for GST on rent charged and claims cannot be made for GST credit for associated costs. Even if another GST registered enterprise is carried on, there is no need to account for GST on Airbnb income. There may be a requirement to account for GST in these situations:
- Renting out serviced apartments
- Providing “hotel-like” accommodation
- Providing bed and breakfast
CAPITAL GAINS TAX
Many Airbnb hosts are completely unaware of the potential capital gains tax implications from renting out their properties. Any profits from the sale of a main residence (the house in which you live) are usually exempt from capital gains tax. However, where part of the property (eg a bedroom and shared areas) are rented out, part of the main residence exemption is lost based on the proportion of the floor area rented out, and the length of time it was rented.
Sometimes the capital gains tax main residence exemption is not lost. For example where the taxpayer moves completely out of the main residence to live in another home (not owned by the taxpayer) for a maximum of 6 years.
For more information see https://www.ato.gov.au/general/the-sharing-economy-and-tax/renting-out-all-or-part-of-your-home/how-capital-gains-tax-applies/
If you have questions about purchasing an investment property or your thinking of advertising on Airbnb we are here to help. You can contact us on 07 31189505 9am-5pm Monday to Friday.
