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Australia Holiday Home and Airbnb Tax Guide

the tax rules for the holiday homes and the short-term rental properties (the "Airbnb, the Stayz, the Booking.com") in Australia. The guide covers: the mixed-use property deductions (the "the holiday home used for both the rental and the personal use") — the holiday home that is "used for both the rental income and the personal enjoyment" requires the "apportionment of the expenses" based on the "days of the rental use vs the days of the personal use"; the "ATO approach" — the "expenses are apportioned on the reasonable basis" — the "most common method" is the "number of the days rented divided by the total days in the year" (the "the 365-day method") or the "number of the days rented divided by the days available for the rent" (the "the available-for-rent method"); the "genuinely available for the rent" requirement — the holiday home must be "genuinely available for the rent at the market rates" to claim the full deductions for the "expenses during the rental period"; the personal use apportionment (the "the expenses disallowed for the personal use") — the expenses must be "apportioned between the rental use and the personal use" — the "expenses that are fully deductible" (the "the agent fees, the advertising costs, the cleaning fees between the guests") are the "directly related to the rental use only"; the "expenses that are apportioned" (the "the interest, the council rates, the insurance, the repairs, the depreciation, the body corporate fees") are the "shared between the rental and the personal use"; the "personal use days" (the "the owner and the family stay in the property") are "not deductible"; the CGT implications for the holiday home (the "the main residence vs the investment property") — the holiday home that is "not the principal place of residence" is "subject to the CGT on the sale"; the "50% CGT discount" applies after the "12-month holding period"; the "6-year absence rule" may apply if the holiday home was the "former main residence"; the "personal use asset" (the "the holiday home used predominantly for the personal use") may be "CGT-exempt" if the "cost base is below $10,000".

Short-Term Rental (Airbnb) Deductions and the ATO Guidance

  • Airbnb income reporting: The "short-term rental income" (the "the Airbnb, the Stayz, the Booking.com, the VRBO income") must be "declared as the rental income" in the "tax return" — the "income is the assessable income" at the "Australian resident tax rates". The "platform" (the "Airbnb") reports the "income to the ATO" under the "data-matching program". The "host must keep the records" of the "income received" and the "expenses incurred".
  • Directly deductible expenses: The "expenses directly related to the rental activity" are "100% deductible" and include: (a) the "platform fees" (the "Airbnb service fees, the Booking.com commissions, the Stayz listing fees"), (b) the "cleaning fees" (the "the professional cleaning between the guests, the laundry of the linen and the towels"), (c) the "supplies" (the "the guest toiletries, the coffee, the tea, the welcome amenities"), (d) the "advertising and the photography" (the "the professional photos, the listing optimisation, the promoted listings"), (e) the "guest communication and the management" (the "the co-host fee, the property management fee").
  • Apportioned expenses: The "shared expenses" must be "apportioned" based on the "rental days vs the total days" or the "rental days vs the available days". The "ATO acceptable methods": (a) the "365-day method" — the "total expenses times (the rental days divided by 365)", (b) the "available-for-rent method" — the "total expenses times (the rental days divided by the days the property was available for the rent)". The "available-for-rent method" is the "more favourable" when the property is "not available for the rent for the extended periods" (the "the owner blocks the calendar for the personal use").

For the rental property expenses and the general rules, see our Rental Property Expenses Guide →.

GST and the Short-Term Rentals

  • GST registration requirement: The "short-term rental" (the "the residential accommodation through the Airbnb, the Stayz, the Booking.com") is the "residential rent" and is "GST-free" (the "input-taxed supply for the GST purposes"). The "host does NOT charge the GST on the residential short-term rental" because the "residential accommodation is the GST-free supply". The "commercial accommodation" (the "the hotel, the motel, the B&B with the meals") is the "taxable supply" and the "GST at 10% applies".
  • Commercial residential premises: The "commercial residential premises" (the "the hotel, the motel, the inn, the hostel, the boarding house, the B&B with the meals") are the "taxable supplies" — the "GST at 10% on the accommodation". The "host providing the meals, the daily cleaning, the reception services" may be the "commercial residential premises" and must "register for the GST" if the "turnover exceeds the $75,000 threshold".
  • Input tax credits: The "host not registered for the GST" (the "the rental income is below the $75,000 threshold") "cannot claim the input tax credits" on the "business purchases" (the "the GST on the Airbnb supplies, the cleaning products, the furnishings"). The "host registered for the GST" (the "the commercial residential premises") can "claim the input tax credits" on the "expenses related to the GST-taxable supplies".

For the GST rules and the registration requirements, see our GST Guide →.

Capital Gains Tax on the Holiday Home Sale

  • Main residence exemption: The "holiday home" that is "not the principal place of residence" is "NOT eligible for the main residence CGT exemption". The "primary residence" (the "the home lived in by the owner") is "CGT-exempt". The "holiday home" that is "used as the main residence for the part of the year" may be eligible for the "partial CGT exemption" under the "6-year absence rule" if the property was the "former main residence".
  • Personal use asset exemption: The "holiday home" that is "used mainly for the personal use" (the "the personal use asset") may be "CGT-exempt" if the "cost base at the time of the sale is $10,000 or less". The "cost base" includes the "purchase price, the stamp duty, the legal fees, the capital improvements". The exemption is the "limited to the personal use assets" — the "holiday home that is also used for the rental income" is the "investment asset" and is "fully subject to the CGT".
  • Partial CGT exemption: The "holiday home used for both the rental and the personal use" — the "CGT calculation" uses the "proportionate method" based on the "floor area" and the "time of the rental use vs the personal use". The "CGT discount of 50%" applies after the "12-month holding period". The "rental use period" is the "income-producing period" included in the "CGT calculation".

For the CGT rules and the discount calculations, see our Capital Gains Tax Guide →.

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