Australia: tax

[Sally3]

Hi, can anyone give me any advice on how Australian tax works for Airbnb revenue?  Thanks very much 🙂

[Marlous0]

Thanks Louise - I have always declared the income and claimed the costs and associated running expenses - that is not the issue.  The issue is the capital gains tax if I sell my home which I will certainly be doing down the track when the house gets too big for me.  Had we bough the house just 6 months earlier I would not have been impacted.

[Karen584]

Hi Louise. You have a great depth of knowledge here so I’ll pose our situation for you and others. We have built a 2 bedroom villa on our acre property which is not subdivided. We live in the main house and rent out the villa on Airbnb. It is used by visiting family other times and placed as unavailable in Airbnb those times. As it is not part of our residence (separate mortgage) but on the land, are there CGT implications as we cannot sell the villa separate to our property but we do not live in it (not that we want to)?  Does this also have implications to how we place in our number of days available to rent. It was rented 39 days out of 300 available days last financial year (mightn’t sound much but every second weekend was all that we were after) . This has flummoxed a number of tax agents that I’ve asked as it seems to be a different set up to regular Airbnb  usage and I get different responses as to how the space can be used and how to classify it tax wise. 

[Louise0]

I'm surprised that your situation has 'flummoxed' tax agents.  It's simple.  The villa/granny flat/whatever is part of your main residence and as such would ordinarily attract the main residence exemption  (MRE) for CGT purposes.  Given this, the loss of the MRE stemming from your Airbnb activities is proportionate to your use for income producing purposes.     The  % loss of the MRE CGT shield is equal to the % you could (and should be) claiming of fixed expenses such as council rates etc.  This amount is floor area (or total area, if land is involved) x  % occupancy over the period starting when you first used it for income producing purposes and when you sell it.    An important part of this calculation is establishing the value at the time you first used it for income producing purposes, so if you didn't do this at the time, it's probably a good idea to get a retrospective valuation done now.  Retrospective valuations can be complicated, so don't leave it too long.

BTW, if you check your lender's documentation, I'm sure you won't find that they've somehow found a way to secure the loan only against that portion of your property, so I'm not sure what you mean by 'separate' mortgage.  If you want greater certainty about the proportionate deductibiliy of your mortgage interest and the treatment for CGT purposes I suggest you apply for a PBR.  The process is free and very straightforward.  All the info you need is on the ATO website.   However, you shouldn't need to do this as any competent accountant should be able to explain it to you.

[Shauna13]

Hi all,

Is anyone able to give me any guidance on being an airbnb cohost & the associated tax? All the information I can find is related to simply being a host (owner/renter air bnb-ing their own place) and I can't find anything about being a cohost.

My earnings from airbnb cohosting for the 2017/2018 year are just over $1000, on top of my annual income. I'm trying to add air bnb as an 'employer' so I can declare the income but I am lost as to whether this is the right place to add it, as air bnb do not appear to have an ABN and this is one of the requirements when adding an employer as paying you income. Or am I supposed to somehow ask the people I was co-hosting for, for an ABN? 

Any assistance would be very very much appreciated. 

Ta, S

[Louise0]

Shauna,  It's you who needs an ABN, not the person paying you the fee you charge for providing co-hosting services.    The host paying you isn't your 'employer', you are.  You fees are income from self-employment as a sole trader.

[Ehsan9]

Hi all,

I have a question which I could not find any answer from the ATO website. Also, I have called them without any good answer or guideline. So would appreciate if you can share your experience and knowledge. I am renting a room via Airbnb while I am a tenant and renting whole the flat. All the rules, deductions and etc that I know so far are for landlords who rent their own property. Even for lodge taxes, there is a mandatory field you should mention your ownership percentage (which cannot be zero). Moreover, there is no particular section for a  partially rental deduction I have already paid. Does anyone have the same experience?

[Louise0]

You should get advice from an accountant, but generally, any expense incurred in earning taxable income is deductible against that income.  Therefore, the proportion of rent you pay which is attributable to your Airbnb space is a deductible expense, as is the equivalent share of utilities, cleaning etc.

[Ted93]

Hi Louise, how about the airbnb service fees? I assume that because they are deducted before you receive any income that you do not need to account for them? Your advice in this forum is fantastic. Cheers, Ted

[Louise0]

They've been deducted so no need to do anything.  The income component is your payout from Airbnb, that's it.

[Canan2]

Hi Louise, 

I do not know if you are still around. I am kind of in the same situation. I have rented a room via AirBnb in my unit while I am a tenant. I am looking for an accountant and talked to couple of them. One says I need an ABN, the other says I don’t need and we can declare under ‘other income’. One thinks that rent is deductible, other thinks it is not. It is very confusing. I just want to declare the income and declare it right. It is really hard to find information when you are a tenant doing AirBnb. I already stopped doing it and not planning to start again. It doesn’t worth such effort, I think:) 

[Charlie313]

Hi Canan, did you get to an answer on this? 

[Ying48]

I am facing the same situation as well. It is complicated. Sometimes, I would rent out the whole and lived in my friend’s place. Just hard and difficult to measure. 

[Evelyn170]

Hi all. This is an example that I have seen on a website. Not sure how accurate it is so I hope someone can clarify this formula for counting CGT.

A family buys a house for $380,000 in Queensland in 2012. They decided to rent the house on Airbnb for about 1 month while they are away on holidays receiving an income of $5000 a month. Over 6 years, they have received $30,000 in rent which they declared and paid tax on it. In 2018, they decided to sell the house for $500,000 which is a $120,000 capital gain. However, 1/12th of the gain or $10,000, is subject to capital gains tax (CGT). However, this is reduced by 50% as the asset is held for more than 12 months. The homeowner now faces paying tax on $5,000 capital gain having made rent of $30,000 over a period of 6 years.

Anyone who is knowledgeable about Capital Gain Tax (CGT) can confirm if this is correct? Thanks.

[Louise0]

It's simplistic, but essentially correct.   It paints a bleaker picture than it should.  What it doesn't tell you is that the homeowner has also been able to deduct 1/12 of the rates, mortgage interest, insurance etc and also depreciate or expense some items.  So, the taxable income each year would usually be significantly less than $5,000.  Also, whilst they may well have an additional taxable income from the capital gain of $5,000 in the year of disposal, this will be equally proportioned between the owners and taxed at their marginal rate, so the additional tax may be minimal or even zero.

[Helen427]

hello @Sally3 @Canan2 @Amanda1077 @Louise0 @Marco-and-Dominique0 @Mel121 @Annelies14 @Amanda1077 @Clare0 @Nick415  @Lito0 @Helen466 

@Rachel177 @Megan388 @Simon489 @Robin4 @Heather222 @Jenny254 @Sandra126 @Marlous0 @Wendy177 @Karen584 @Shauna13 @Evelyn170  

@Alastair-and-Glen0 and others in Australia

You may like to share this article about Regulations in Sydney and loopholes in relation  to the 21 day limits amongst your fellow Australians.

Lead the way and share internationally so we all benefit from the ripple effect of acting for the betterment of all the people of the world!!

All the best from over the ocean in Remuera, Auckland, New Zealand where we also face these regulations and discussions

Fears Raised about loopholes to Sydney Airbnb limits.

https://www.smh.com.au/national/nsw/fears-raised-about-loopholes-to-sydney-airbnb-limits-20190916-p5...