Renting out that spare room or property on Airbnb can bring in some useful extra cash –

plus you can meet nice, interesting people. But be careful about your Airbnb tax obligations

and tax benefits – there is a lot to gain, or a lot to lose.
 

Australian Airbnb tax information can be tricky to find, so let’s try to touch on some important bits right here…

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Universal rule: Extra income means extra taxes to pay

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When you add a new source of income like Airbnb (kind of an income which you are not earning from a hobby), don’t just treat that income as spending money.

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Because earning that extra income means you’ll be charged more tax by the ATO at the end of the year. It is important to save some of what you earn through Airbnb so you can pay the ATO at tax time.

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When you top-up your income with untaxed earnings from Airbnb and other types of ‘side businesses’, you might need to save as much as 30 or 40 per cent of your new earnings for tax! The amount depends on the total income you earn and the amount of tax deducted from your other income sources.

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Just keep in mind, that TaxCrop can help you predict the right amount you should save for the “tax man”, as well as guide you to lower your total taxable income with maximizing allowable deductions.

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Can I re-rent a property which I rented through Airbnb? 

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When you rent out a room through Airbnb, you’re technically offering a short term sub-let agreement, which in some states requires a tenancy agreement. A confusing aspect of Airbnb is that regulations are still being made and can differ from state to state. Consider the risks involved before listing your property, or talk to your landlord or real estate agency first. You’ll also need to check your rental agreement or lease plus Body Corporate laws if you live in an apartment complex.

This is serious stuff – don’t just ignore it or try to be sneaky by re- renting property on Airbnb; you could get into a lot of trouble!

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Can Airbnb trigger CGT?

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Capital Gains Tax (CGT) is payable when you sell an investment property. This can be a hefty tax bill. 

 

CGT is usually not payable on your family home. However, if you rent out your family home (or a part of it), even just a room on Airbnb, suddenly your family home is viewed differently by the ATO; when you sell it, you may face an ATO tax bill for CGT.

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The income you make from Airbnb will usually outweigh the later effect of CGT, but not always. It is something you need to consider carefully with a futuristic view.

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Tax benefits with Airbnb

 

Renting a room out of your existing property does create some income and tax perks.

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You can claim expenses and depreciation for the percentage of the area of your house that was available for rent.

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Airbnb tax advantages can include properly-calculated portions of…

 

• Internet and phone costs

• Water, power and council rates

• Upkeep and repairs

• Depreciation on the cost of furnishings and equipment

• Interest on your mortgage

 

Those can add up to a decent set of tax deductions for Airbnb hosts.

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You’ll need to keep a record of when the room was actually rented in order to correctly claim expenses, but for a regular Airbnb host, it often pays off.

 

Don’t try to hide your Airbnb income

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If you’re using Airbnb, it’s out there for everyone to see. The ATO can track this income easily, so even if you’re not earning a lot of money, keep your records and be honest about the income you’ve generated from the property. Airbnb tax is a real thing!

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The ATO is not “laid-back” about people who under-claim rental income and it can lead to back taxes owing plus new fines, penalties and interest charges.

 

You may be able to apply these principles to similar income generating methods. Contact TaxCrop to understand how to minimize tax liability on your additional income.

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