December Accountant Tip – Attention Airbnb hosts – the ATO is watching

Each month I will be bringing you an accountant tip; proudly brought to you by GCG Accountants in Cairns:

Attention Airbnb Hosts – the ATO is watching

Airbnb is a way to rent your property, home or part of your home to short term tenants through an app. There are many more sharing economy websites and apps other than Airbnb and we all agree – it is a great way to earn additional income; but be aware – there are tax consequences.

Airbnb income is treated as passive investment income – similar to that of a rental property. You will have to declare all your income received but you are also entitled to a tax deduction for expenses relating to that income.

Please do not short change the ATO when declaring your Airbnb income as they obtain records directly from the source and can easily cross reference to your tax return.

With regards to your expenses claimable, you have to work out an apportionment method but part or your electricity, water, insurance, rates, loan interest, internet and your app fees could be deductible. It is also essential to keep appropriate records.

On top of your income tax issues you also have to consider any Capital Gains implication. As a rule your Principal Place of Residence (PPR) is Capital Gains Tax free as it is private in nature. However, if you use your PPR to produce income the rules change and get quite tricky and could leave you with a tax bill when selling in the end. Also worth noting is, that the 6 year absence rule as per our October post does not apply either.

As always, the devil is in the detail and we recommend that you contact a tax professional to assist with information fitting to your personal circumstances.

If you wish to know more about how any of the above relates to your personal circumstances don’t hesitate to contact us anytime.

GCG Accountants
53 Anderson Street
Manunda, QLD 4870
(07) 4031 3522