News
Do you operate, or are you considering operating an Airbnb with your home or even investment property? It’s worth understanding the tax implications before you take the plunge (or now that you have) into the short-term rental business.
Some are straight forward, others may be more complex depending on your situation, so remember the below is designed as a guide. It’s always prudent to discuss your plans with your Attune team to ensure the strategy you take will suit your situation first, but let’s dive into some of what you can expect.
As with any tax related matter, ensure your records are complete. Hang on to documents and records of all income earned to ensure everything is accurately reported in your income tax return.
This includes detailed records of expenses you incur that you can claim as deductions. Some expenses are fully deductible, while others are partially or not deductible at all. The deductibility of your expenses depends on if, and how often the property is used privately, or how much of the year it is available for rent. Expenses may need to be apportioned accordingly, but we’ll touch on this in more detail shortly
A simple guide to follow if you’re renting only part of your property:
Examples of expenses relating to your Airbnb listing that could be fully deductible for tax purposes include:
And here’s some examples of expenses relating to your ENTIRE rental property that may be partially deductible for tax purposes:
It may seem obvious, but you won’t be able to claim things like personal travel to and from the property or phone bills for example.
Deductions can still be made if you have vacancy, but only if you’re renting out the entire property.
If your entire property is available to rent, expenses are deductible when the property is rented out or available to rent.
For example, if your property is available for rent for 180 days a year then only the portion of rental expenses that were incurred over that period are deductible. We’ll state that again – it doesn’t matter if the property is rented or not in this scenario, your deductions can still be included in your tax lodgement.
But, if only a portion of your property is available to rent – say a closed off section of the house – your deductions can only be included for the period the property is actually being rented out.
This may change your approach depending on what your strategy is, and it will certainly dictate the outcome when it comes to lodgement time.
As an example, if you’re operating a short-term rental in the Greater Sydney area, you’re only allowed to rent it out for up to 180 nights of the year to maintain residential status.If you go beyond that, it will be deemed a business for tax purposes.
Considering the limits, if you’re looking to make money on your rentals, be selective of when you’ll be making your property available for short-term rental on platforms like Airbnb.Peak seasons are great, but ensure you understand your market first.
You don’t need to pay GST on amounts of residential rent you earn, if you stay within the short-term rental limits of your area.
There’s more to the short-term rental game when it comes to tax, so if you’re looking at moving into it, or, you already are and want sound, strategic advice to stay on top of your tax situation, speak with the Attune team today. Give us a call on 1300 866 113 or send us an email to start the conversation.
