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Property Tax Guide

Airbnb & short-stay rental tax in Australia: income, deductions, GST & CGT.

Renting a room, apartment, holiday home or investment property through Airbnb or another short-stay platform can create income tax, deduction, record-keeping and capital gains tax considerations. This guide explains the key areas Australian hosts should understand.

Modern furnished short stay rental apartment living room
Short-stay accommodation and Australian tax

Making money from short-stay accommodation does not sit outside the tax system. Rental income generally needs to be declared, while deductions depend on how the property is used, when it is available for rent and the nature of each expense.

01
Short-stay rental income is assessable Income received from renting all or part of a property through a sharing platform generally needs to be included in your tax return.
02
Platforms report relevant transactions Short-term accommodation is covered by the ATO's Sharing Economy Reporting Regime.
03
Private use can reduce deductions Expenses often need to be apportioned when the property or part of it is also used privately.
04
Your main residence CGT position can change Using part of your home to produce rental income can affect the main residence exemption when the property is eventually sold.

Declaring Airbnb Income

The money you earn from a short stay doesn't disappear at tax time.

If you rent out a property, holiday home, apartment, granny flat or part of your own home, the rental income you receive generally forms part of your assessable income.

This applies whether the booking comes through Airbnb, another accommodation platform, a property manager or a direct arrangement.

What income may need to be considered?

  • Amounts received from guest accommodation bookings
  • Booking or letting fees that you retain
  • Cancellation amounts that you become entitled to keep
  • Amounts received in connection with rental activity
  • Certain insurance payments or reimbursements connected with lost rent or deductible rental expenses
ATO Data Matching Do not assume platform income is invisible.

Operators of electronic distribution platforms report eligible short-term accommodation transaction information to the ATO under the Sharing Economy Reporting Regime.

House keys held inside a modern rental apartment Rental income can arise from a room, apartment or entire property

Rental Expenses

Some costs may be deductible — but the reason for the expense matters.

Expenses connected with producing rental income may be deductible, but different expenses can have different tax treatment. Some may be deductible in the year incurred, others may be claimed over time, and private or capital expenses are not simply claimed as ordinary rental expenses.

The correct treatment also depends on whether the property was rented, genuinely available for rent, used privately, or only partly used to earn rental income.

Platform or agent fees Fees and commissions directly connected with obtaining rental bookings may be relevant rental expenses.
Cleaning Cleaning expenses connected with the rental activity may be deductible where the usual requirements are met.
Council and water charges These may be deductible to the extent they relate to income-producing use of the property.
Insurance Relevant building, contents or landlord-related insurance costs may form part of rental expenses.
Loan interest Interest can be relevant where borrowed funds relate to the income-producing property. The loan's actual use matters.
Repairs & maintenance Repairs may have different treatment from improvements or other capital expenditure.
Body corporate / strata Certain fees may be deductible, although the nature of individual charges should be considered.
Depreciating assets & capital works Furniture, appliances and building expenditure can have separate deduction rules rather than being immediately deductible in full.
Important A deduction is not the same as receiving the expense back.

A deductible expense generally reduces taxable income. The actual tax effect depends on your circumstances and the way the expense is treated.

Apportionment

Renting the property sometimes? You may need to divide the expenses.

A common issue with short-stay accommodation is that the property is not necessarily used to earn rental income all year. Owners may stay there themselves, reserve it for family and friends, or rent only part of their home.

In those circumstances, expenses generally need to be apportioned on a reasonable basis so that the private component is excluded.

Apportionment may be required where:

  • The property is genuinely available for rent for only part of the year
  • You use the property privately during part of the year
  • Only one room or part of the property is rented
  • Family or friends use the property under non-commercial arrangements
  • A loan used for the property also has a private purpose

Simple Illustration

Why 100% of an annual expense may not be claimable

Imagine a holiday property is available for genuine commercial rental for part of the year but is reserved for the owner's private holidays during another period.

An annual expense such as council rates may need to be reasonably apportioned between income-producing and private periods.

By contrast, an expense that relates solely to a rental booking may require a different treatment. The appropriate method depends on the particular expense and circumstances.

Your Home & CGT

Airbnb income today can matter when the property is sold later.

Your main residence is generally eligible for the main residence CGT exemption when the relevant conditions are met. However, using part of your home to produce assessable rental income can mean you are not entitled to the full exemption.

The calculation can involve factors such as the part of the home used to earn income and the period during which it was used for that purpose.

Property keys with financial documents in the background

Don't Ignore The Future Sale

Keep property records from the beginning.

Purchase documents, ownership costs and records of improvements can become important when working out the property's CGT position later.

The tax impact can be different depending on whether you rent a room while continuing to live in the home or move out and rent the entire former home.

What about the six-year rule?

In certain circumstances, after a property has first been your main residence and you move out, you can choose to continue treating it as your main residence for CGT purposes for up to six years while it is being used to produce rental income.

The rule has conditions and interacts with whether another property is treated as your main residence. It should not be assumed to apply simply because a property is listed on a short-stay platform.

CGT Planning Renting a spare room and moving out to rent the whole home are not necessarily the same CGT situation.

If the property is or was your main residence, consider the CGT consequences before relying on a general rule or online example.

GST & Short-Stay Accommodation

Short stay does not automatically mean GST must be added to the rent.

The GST treatment depends on the type of premises and the nature of the accommodation being supplied.

A supply of ordinary residential premises by way of rent, hire or licence is generally input taxed where the premises are used predominantly for residential accommodation. The length of the guest's occupation does not by itself turn an ordinary residential property into commercial residential premises.

Different rules can apply where the operation is more like a hotel, motel, inn, hostel, boarding house or other commercial residential premises.

GST Caution Don't rely only on a turnover figure to decide the GST treatment of accommodation.

First consider what is actually being supplied and whether the premises are ordinary residential premises or may be commercial residential premises.

Record Keeping

Good records can make the difference between a supported claim and a guess.

Keep evidence of both your rental income and the expenses connected with the property. For many rental-property records, the ATO generally requires records to be retained for five years from the relevant date, with longer retention potentially required in particular circumstances.

CGT-related documents can also remain relevant for much longer because they may be needed when the property is eventually sold.

01 Platform statements Booking information, payouts, platform fees and other transaction details.
02 Rental calendar Dates rented, genuinely available for rent, blocked for private use or occupied by you, friends or family.
03 Expense documents Receipts, invoices, insurance, rates, utilities, property-management fees and relevant repair records.
04 Loan documents Records that help establish how borrowed funds were used and the interest connected with the property.
05 Property purchase records Contracts, acquisition costs and other documentation potentially relevant to a future CGT calculation.
06 Improvement records Documents relating to renovations, improvements and other capital expenditure.
Modern furnished rental apartment interior Keep records of both rental activity and periods of private use

Short-Stay Tax Checklist

Before lodging your return, work through these points.

01 Include relevant short-stay rental income in your tax information.
02 Download your accommodation-platform transaction and payout statements.
03 Separate expenses that relate solely to rental activity from expenses shared with private use.
04 Identify periods when the property was genuinely available for rent and periods reserved for private use.
05 Consider whether only part of the property was used to produce rental income.
06 Review repairs, capital improvements, furnishings and depreciating assets separately rather than assuming the same treatment applies to each.
07 If the property is or was your home, consider the possible CGT effect of the income-producing use.
08 Consider the correct GST treatment if your accommodation arrangement goes beyond ordinary residential premises.
09 Retain receipts, statements, rental calendars and property-related records.
10 Check whether separate state, territory or local short-stay accommodation rules apply to your property.
Bright modern investment or short stay apartment

Finance in Life

Property income can make a personal tax return more detailed.

Short-stay accommodation can involve rental income, deductions, private-use apportionment and longer-term CGT considerations. Finance in Life can help you work through the information relevant to your circumstances.

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Short-Stay Rental Tax FAQs

Common questions from Australian property hosts.

Short-term rental income generally needs to be included in your tax return. This can include income from renting all or part of a home, holiday property or investment property through an accommodation sharing platform.
Short-term accommodation transactions are covered by the ATO's Sharing Economy Reporting Regime, under which relevant electronic distribution platforms have reporting obligations.
The tax treatment of a loan is not the same as simply claiming mortgage repayments. Interest and principal are different, the use of the borrowed funds matters, and any private component may need to be excluded.
When only part of the property is used to earn rental income, shared expenses may need to be apportioned on a reasonable basis. Income-producing use can also affect the CGT main residence exemption.
No. Ordinary residential premises rented for residential accommodation are generally input taxed for GST purposes. Different treatment can apply to commercial residential premises, so the nature of the accommodation needs to be considered.
It can. If part of your home is used to produce assessable rental income, you may not be entitled to the full main residence CGT exemption when the property is sold.
General Information

This article provides general information only and does not take into account your individual circumstances. Rental deductions, GST treatment, capital gains tax and other tax outcomes depend on the facts of each arrangement, applicable tax law and supporting records. Consider obtaining advice relevant to your circumstances before making financial or tax decisions.

Short-Stay Rental Tax

Renting through Airbnb or another platform? Understand the tax side too.

Contact Finance in Life if you need help working through rental income, expenses, private-use apportionment or other tax considerations connected with your short-stay property.

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