Airbnb Tax in Australia: What Rules Apply to STR Hosts?
Whether you're renting out an investment property in one of the best coastal towns or a single room in your home, it's essential to be on top of your tax obligations. That's why we've created this article that can help you understand how to navigate Airbnb tax in Australia.
Owning an Airbnb is a great way to make some extra income by providing short-term accommodation to travelers looking for a more “local” experience. But you should remember that any income you make through Airbnb and its alternatives in Australia is subject to taxation.
So whether you’re renting out an investment property in one of the best coastal towns or a single room in your home, it’s essential to be on top of your tax obligations. That’s why we’ve created this article that can help you understand how to navigate Airbnb tax in Australia.
Keep reading to find out how to figure out what you owe and what you can deduct.
You may also want to check out our blog article to learn about new Airbnb rules in Australia that govern using properties for short-term stays.
Airbnb Tax Australia: How Are Airbnb Hosts Taxed?
Airbnb hosts in Australia are typically subject to the same tax rules as other landlords. According to the Australian Taxation Office (ATO), money you receive from renting out a part or all of your property to guests is considered assessable taxable income.
This means that this rental income must be declared in your income tax return in the rental section. But the good news is that you can also claim tax deductions for any costs associated with your Airbnb activity.
As you see, renting out all or a part of your house through Airbnb is no different from other rental properties and you must keep detailed records of rental income and expenses related to running Airbnb.
Since being a STR host involves many responsibilities, delegating as much as possible and automating repetitive hosting tasks using vacation rental management software like Hospitable makes sense. Then, you’ll have more time to focus on providing your guests with an exceptional experience.
What Tax Deductions Can Airbnb Hosts in Australia Claim?
Airbnb hosts are eligible for the same tax deductions that other landlords in Australia can claim. Some expenses are fully deductible, while others depend on how you use the property.
Common expenses you can claim include:
Depreciation of furniture and appliances used in your STR property
Costs of repairs and maintenance
Utilities like water or electricity
Cleaning cost for the rented area
Costs associated with listing the property, such as hiring a professional photographer
Commissions and service fees charged by Airbnb
Property insurance
Council rates
Mortgage interest or rent
Remember that if you only rent out part of your home on Airbnb, you’ll have to apportion these deductions appropriately and only claim expenses related to that part of the house. It’s also important to remember that the expenses you are allowed to claim only apply to when your home or apartment is available for rent.
For example, if you rent out your holiday home 180 days a year but live there yourself the rest of the year, you can only deduct taxes for the portion of time your property is available for rent. In this case, it’s 180 days. The property doesn’t need to be occupied by guests during this time, but it must be listed on Airbnb or other booking websites and be available for rental.
Listing your property on multiple OTAs allows you to reach more travelers and get more bookings. However, managing your channels can be very challenging as you must constantly hustle between different websites. Luckily, Hospitable users can take advantage of its channel manager feature that allows you to manage your listings on Airbnb, Vrbo, and Booking.com efficiently from a single dashboard.
According to the ATO, you must keep records of rental income and deductible expenses for five years to support your claims. This is especially relevant for long-term deductions, such as asset depreciation. You can only claim any rental property expenses on your tax return if you can prove your claim with a receipt or bank statement.
What about GST?
Airbnb hosts in Australia don’t have to pay goods and services tax (GST) because it doesn’t apply to residential rents. You are not liable to pay this tax on the rent you charge, even if your turnover from renting exceeds the GST threshold ($75,000). But this also means you can’t claim GST credits for costs associated with operating an Airbnb.
What about Capital Gains Tax?
When you sell your family home, the sale is usually free of capital gains tax (CGT). But if you used your property or part of it to generate income, such as renting it out on Airbnb, part of the gains are taxable.
Remember that even if you stop renting a long time before you sell the property, you must still pay CGT. This is an implication you should consider before turning your home into Airbnb. Not factoring CGT into your cost-benefit analysis can be a costly mistake you, as an Airbnb host, need to avoid.
Final Thought
Before you become an Airbnb host in Australia, you must be sure you understand all the potential tax implications of renting out your home. Remember that tax laws are rather complex and can vary based on circumstances. That’s why consulting with a qualified tax professional is always advisable. It’s also important to keep accurate records of your income and spending.
Running an Airbnb is undoubtedly a rewarding experience, but not all guests are perfect, and accidents happen, so you need to protect your home and belongings from potential risks. Check out our blog article about the main ways to get Airbnb insurance in Australia and learn about your options as a homeowner.
