The Sharing Tax: Airbnb Tax Deductions to Remember

One of the most convenient things to emerge from the proliferation of the internet is easily the sharing economy. The sharing, or gig, economy refers to the modern way people can use their smartphones and devices to gain work, goods or services from other users. You are likely familiar with the mammoths of Uber, UberEATS, Deliveroo, Ola and Airbnb, amongst others. The rise of these methods of exchange have proven to be a challenge to the Australian Taxation Office (ATO), with many myths and misconceptions surrounding user tax obligations. Here, our Tax Return team look to clarify the regulations and tax deductions available to those making an income from sharing services, particularly Airbnb.

If you’re thinking of becoming an Airbnb host, or have been one for a while, it’s important to read up on how this extra income will impact your next tax return – especially when it comes to claiming tax deductions.

Airbnb Tax Deductions to Claim

It’s important to remember that Airbnb hosts are treated similar to traditional rent landlords by the ATO. Common claimable tax deductions include:

  • Electricity and gas costs;
  • Property insurance;
  • Cleaning and maintenance costs;
  • Council rates;
  • Fees or commission charged by Airbnb; and/or
  • Interest on a loan for the property.

Any tax deductions claimed must relate only to the period that your property is used for hosting. You are unable to claim the expense of insuring your home for a year if you only hosted Airbnb guests for two months. Instead, you’ll be required to apportion that cost relative to the eight weeks you hosted guests.

If you also reside within the property while hosting out a room or space to an Airbnb guest, you are required to apportion your tax deductions based on the area percentage use. This includes their primary space (like a private room and ensuite) and shared spaces like the kitchen. This calculation can become complex, so it may be useful to speak to a trusted tax agent for your next tax return.

Of course, these tax deductions are contingent on your accurate record keeping. Make sure to keep all expense records (receipts, invoices, statements) related to your hosting income and duties.

Your Capital Gains Tax Exemption

One of the first things to consider before becoming an Airbnb host is your Capital Gains Tax exemption. An exemption is typically applied to residential properties provided they were not used to incur an income. When you sell your home, usually you do not need to pay Capital Gains Tax to the ATO.

If you choose to rent out all or a portion of your residential home, unit or apartment through Airbnb or a similar service, you will lose a portion of this exemption. Depending on your circumstances, this loss may have a big impact on your finances, so it’s important to get some help. The team at Tax Return are here year-round with up to date and trustworthy advice. Contact us to have a confidential chat about your sharing economy income and your capital gains tax position, or read more here.

Wait, do you need to pay GST?

No, you don’t need to pay GST on your Airbnb hosting income. However, this means you can’t claim GST credits on your tax return either. However, if you also earn income from ride-sharing services like Uber, you do need to register for GST and this will apply to the whole of your income.

Trust the Tax Return Team with Your Airbnb Tax Return

Let the team at help you make the most of your sharing economy income. Contact us today to start your tax return online or over the phone with one of our local tax accountants.