Renting out a room or property through Airbnb or other short-term platforms can be a great way to earn extra income—but it also comes with tax obligations. The Australian Taxation Office (ATO) has ramped up its data-matching capabilities and is closely monitoring income from platforms like Airbnb. Here’s what you need to know to stay compliant and make the most of your deductions.
1. Declare All Income
If you earn money from renting out your property—even occasionally—you must declare it as income in your tax return. This applies whether you’re renting out a single room, your entire home, or a holiday property.
The ATO receives data directly from rental platforms, so failing to declare income is likely to trigger a red flag.
2. You Can Claim Deductions
The good news? You can claim a portion of your expenses related to the rental income. Common deductions include:
- Mortgage interest (proportional to the rental area and time rented)
- Council rates and water charges
- Electricity, gas, and internet bills
- Depreciation on furniture and appliances
- Cleaning, linen, and Airbnb service fees
However, these must be apportioned based on private vs rental use. For example, if you rent a room 50% of the year, you can only claim 50% of the eligible expenses related to that room.
3. Capital Gains Tax (CGT) May Apply
If you rent out your main residence—even just part of it—you may lose part of your main residence CGT exemption when you sell. This can result in a partial CGT liability down the track, depending on the percentage of the property used to generate income and the time it was rented.
4. Keep Accurate Records
Document all income received, dates rented, expenses, and how you calculated any apportionment. Good records are essential not only for tax time, but also if the ATO reviews your claims.
5. GST Generally Doesn’t Apply
You don’t need to register for GST for residential rent, including Airbnb, unless you’re providing hotel-like services. But always check your situation, especially if you operate other businesses.
Final Tip
Short-term rentals can be lucrative, but they come with tax complexity. Talk to your accountant to maximise your deductions while staying compliant.
