Much like Uber, Airbnb disrupted a fragmented and antiquated industry.
There are now over 150 million users of the online marketplace for accommodation in over 190 countries, with over 640,000 playing host to short-term dwellers. In Sydney alone, there are 25,000 Airbnb listings.
TAX CONSIDERATIONS FOR AIRBNB HOSTS
Tax implications and obligations should duly be considered with the benefits of earning an extra income from the full or partial rental of your house or unit.
Here are some important factors for you to consider as an Airbnb host:
- Gross income is assessable
- Airbnb deduct 3% commission from the total fee
- ATO views Airbnb as residential rent. Therefore, there is no GST implications
- Negative gearing is available, provided you genuinely make the property/room available for rent
- You are only entitled to a partial main residence exemption once you list a part of your family home on Airbnb
Airbnb is treated similar to rental properties. The gross rental income is assessable (net rental received plus commissions paid) and is taxed at your marginal rate.
You are entitled to claim the property occupancy and running costs incurred. These expenses fall into three categories:
- Expenses directly associated with the rented area can be deducted in full
- Expenses related to shared areas need to be apportioned
- Expenses related to the private area only cannot be deducted
It is important you keep evidence of all your expenses and discuss this with your tax agent.
|Deductible in full||Not deductible||Deduction Apportioned|
|Host fee (3%)||Private food costs||Utilities (gas, electricity)|
|Photography costs||Private clothing costs||Wi-Fi and home phone costs|
|Decline in value for furnishings, furniture, appliances solely used for Airbnb||Decline in value for furnishings, furniture, appliances for private areas of the home||Decline in value for furnishings, furniture, appliances used in shared areas of the home|
|Linen and laundry costs solely used for Airbnb||Repairs (private areas)||Mortgage interest, insurance, council rates, water rates|
|DVD’s, games etc solely acquired for Airbnb||DVD’s, games etc acquired solely for private areas||Capital works write off|
|Food for guests (e.g. breakfast, snacks, water, mints)||Gardening costs (shared use)|
|Repairs (Airbnb area)||Cleaning costs (covering private & Airbnb areas)|
CAPITAL GAINS TAX (CGT)
A partial main residence capital gains exemption is available if you have used part of your property for income earning activities (such as Airbnb).
The capital gains tax will be calculated based on:
- Floor area used in working out your deductible expenses will also be used here
- Period of which the property was first used to generate income
- 50% Capital Gains Tax discount
Careful consideration is required when weighing up the income you make from Airbnb versus the later effect of capital gains tax.
Note, if you Airbnb your full home, you may be entitled to access the full main residence exemption upon the sale of the property.
Speak to your Tax adviser or contact us to further understand your tax obligations as an Airbnb host.
This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.