What you should know before listing your home on Airbnb

What you should know before listing your home on Airbnb

Airbnb, for instance, has revolutionized the accommodation industry by allowing people to rent out their properties or spare rooms to guests around the globe. With the increasing popularity of Airbnb, the ATO has clarified the tax consequences for homeowners using this service.

When you rent out all or part of your residential house or unit through a sharing economy website or app, like Airbnb, Stayz or similar, you:

  • Need to keep records of all income earned and declare it in your income tax return
  • Need to keep records of expenses you can claim as deductions
  • Don’t need to pay GST on amounts of residential rent you earn

Additionally, homeowners using this service have unintentionally exposed themselves to heavy Capital Gains Tax when they sell their homes. This is because, once an individual rents out a room or part of their property, the ATO will deem the asset to be of an income producing nature and the person is no longer eligible for the full CGT main residence exemption.

The ATO has also been working on collecting data from different sources to compare owner’s tax returns with records from sharing economy websites to target those who might have unwittingly omitted rental income or exposed themselves to capital gains tax.
Some might consider the ATO actions to be unfair. However, the problem here is the lack of knowledge individuals have regarding these tax matters and the need for them to be aware of all risks and consequences before advertising a room online.


Written by: Martha Bustamante