Airbnb offers a great opportunity to rent out that spare room without the long term commitment. Or, it’s a handy way to lease a holiday home that would be quiet for much of the year.
Both of these are great – but some Airbnb hosts may not realise the effects come tax time.
Rental Income Earned & Deductions:
Any rental income earned through Airbnb must be included in your tax return, regardless if it’s a spare room of your home or only rented for one week. Don’t try to hide this income, as the ATO can track this and will be focusing on it in the future.
However, you can claim deductions against this income like any rental property (partial interest on loans, rates, insurance etc) but please refer to your tax specialist for further information on how to do this and what’s included.
Capital Gains Tax (CGT) when you sell your house:
There is normally capital gains tax on the sale of an investment property, but many don’t realise that renting your home on Airbnb can trigger CGT implications when you sell your home. Your family home is typically exempt from CGT due to the main residence exemption, however this status will change once it becomes income producing (via Airbnb) – which could create a tax bill from part of the sale proceeds when it’s sold.
If you are thinking of renting part of your home on Airbnb it is important that you first obtain advice on how this will affect your tax outcome.