Airbnb tax regulations – How will Airbnb affect your tax?

Airbnb tax regulations – How will Airbnb affect your tax?


Many people who rent out a room or property on Airbnb don’t realise that the money they receive is considered as extra income by the ATO. This means that you will have to declare this income when you do your yearly tax accounts and depending on your total income that year, you will quite likely have to pay additional tax on these earnings.

If you don’t save any of your income from Airbnb however, when you complete your tax at the end of the financial year, you could be looking at a very sizable bill from the ATO. So how much should you put aside to cover your tax?

It makes sense to save at least 30% of this additional income, possibly more if the Airbnb income tips you over into a higher tax bracket. It is also a sensible idea to have a chat with your tax accountant so that you have a better idea of how much tax you need to put aside each month. This prevents you from being faced with a big bill from the ATO each year or even a fine for non-payment of taxes.

So if you are considering renting out a room or a property using Airbnb, here are a few other important points you should consider, before signing on the dotted line.

Capital Gains Tax and renting with Airbnb

We all know that if we sell an investment property that we have to pay Capital Gains Tax (CGT) and that if we sell the family home we don’t have to pay this tax. The problem is, however, when you rent out a room in your home with Airbnb.

In this instance, the ATO might well decide that you have to pay CGT when you sell your family home, due to the income you received from renting a room on Airbnb. This is another topic that deserves a quick chat with your tax accountant. In this case, you will need to balance the income received from Airbnb, against the additional tax you might need to pay and the CGT if it is applicable.

Sub-letting a rental property on Airbnb

A sub-let is when you rent a property yourself and then either rent the entire property to someone else or just one of the rooms. This is a tricky legal area because doing this could negate your rental agreement with your landlord or the tenancy agreement you have with a body corporate.

Even if your landlord agrees to you sub-letting the property or a single room on Airbnb, you might well have to complete a tenancy agreement every time this occurs. This depends on where you live in Australia, because every state will have different rules, but it is a complicated arena and you could even end up being evicted because you broke your own rental agreement.

Tax benefits of renting on Airbnb

There is some good news, however, because when you rent your property or a room on Airbnb there are a number of expenses you can claim against your tax. For example, you can claim depreciation for the part of the property that was rented on Airbnb, as well as a number of debits against your tax for additional expenses.

These expenses include water, power and council rates, interest on your mortgage, and the internet and phone costs. You can also claim depreciation costs for furnishings and some equipment, as well as for maintenance and repairs. All of these deductions need to be calculated as a percentage of the property and the best way to ensure that you maximise your deductions is to consult a tax professional.

Take home message on Airbnb tax obligations

You might have to pay tax on any income received from Airbnb and CGT when you sell the property. Always keep meticulous records of all Airbnb income and any expenses and repairs for the entire property, so the correct percentage of deductions can be calculated by your tax accountant.

Ignoring your tax obligations when using Airbnb is not a good idea because sooner or later the ATO will always catch up with you and you could incur additional fines for not declaring this income.

The team at Conrad Carlile is highly experienced in maximising tax benefits from rental and investment properties for both home owners and commercial businesses. If you want tax advice or assistance for Airbnb rentals, please call our team on 07 3871 1522 or complete our online enquiry form for more information.


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