Airbnb Rental income and the ATO
The ATO considers that Airbnb rental Income from renting out part or all of your home is usually determined to be assessable Airbnb income and must be declared in your income tax return. Deductions for the associated expenses may be claimed.
Airbnb residential rents do not attract goods and services tax (GST) so GST credits for associated costs cannot be claimed.
Airbnb Income and expenses
If all or part of your home is rented at normal commercial rates using Airbnb the tax requirement is the same as for any residential rental property. So the Airbnb rental income is included in your income tax return and associated expenses, such as the interest on your home loan, can be claimed as income tax deductions.
Limits to deductions will be incurred if the rent is at less than normal commercial rates.
According to the ATO, income tax deductions cannot be claimed for payments from a family member for board or lodging as this is considered as domestic arrangements and not rental income.
The total amount of the expenses cannot be claimed if only part of your home is rented out using Airbnb. The expenses are apportioned based on the floor-area solely occupied by the renter and adding a reasonable amount for their access to common areas. Deductions for expenses can only be claimed for the rental period.
Board or lodging paid by a family member are considered domestic arrangements and not rental income. Income tax deductions cannot be claimed in these circumstances.
Capital gains tax & Airbnb
Capital gains tax (CGT) will have to be paid on part of any capital gain made when the property is sold as you may be ineligible for the full main residence exemption. Some, but not all, of the factors used for calculating capital gain include: the size of the floor area used to generate Airbnb income, the time period it was rented for, and consideration of the ATO “absence” rule.
Hillyer Riches Management Pty Ltd , accountants and advisors located in Caulfield, is a Corporate Authorised Representative (No 466483) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. AFSL / ACL No. 223135.This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.