Renting out your home on Airbnb: do you know the tax implications?

With interest rates rising and inflation increasing across Australia, many locals are looking for new ways to earn extra income to keep up with the cost of living.

Property is a valuable asset that many of us will be fortunate enough to acquire. As advisors we have seen a growing trend in property owners renting out their home (including part or all of their property) through Airbnb as a way to earn extra income.

Regardless of whether you are presently renting out your property or are considering renting out your property through a digital platform, it is important that you understand the associated taxation consequences.

Any income derived from rent, whether it be from Airbnb or another platforms, will typically be assessable income and will need to be included in your annual tax return.

You can claim a tax deduction for the expenses that directly relate to your rental income during the period it was rented. Some expenses include:

• Advertising costs
• Airbnb or other platform fees and commissions costs
• Depreciation for furniture and fittings
• Maintenance and cleaning costs
• Repairs and maintenance to the property, and
• Food amenities such as tea, coffee, and other foods made available to guests.

It is important to note if you live in the property while it is being rented, you will only be able to claim a portion of the expenses which relate to both the rented space and your living space. This portion is typically determined by working out the floor space being rented as a percentage of the total living space.

Additionally, renting out your home may impact the capital gain you may receive if you ever decide to sell your property.

Usually, a capital gain from the sale of your main residence is exempt from Capital Gains Tax (CGT). However, if you rent part of your main residence to earn income you may no longer be eligible to receive the full CGT main residence exemption and may be subject to CGT on a portion of the sale.

This article was written by Michael Rebula, a manager of tax and business services for Davidsons Accountants and Business Consultants.

Established in 1905, Davidsons have been providing specialist accounting, taxation and business advisory support to Geelong and the Surf Coast for more than 100 years.

For more information on how the Davidsons team can support you in managing your taxation affairs, head to davidsons.com.au

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