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Individual Tax

Income Tax & CGT implications of Airbnbing your property

Income Tax & CGT implications of Airbnbing your property
Sumire Uemura
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Considering starting an Airbnb business at your property? It's crucial to be aware of the tax implications. Understanding these can help you prepare and manage your finances effectively. 


Income earned by Airbnb must be declared in your tax return under the rental property schedule. 


You are also entitled to claim deductions for associated expenses to operate your Airbnb business.

This includes Airbnb specific expenses such as:

  • Cleaning
  • Airbnb fee’s
  • Advertising

This also includes regular rental property expenses such as:

  • Advertising
  • Strata
  • Council rates
  • Depreciation
  • Mowing & Repairs
  • Insurance
  • Interest
  • Water

These expenses are portioned based on time the house is leased for the year. So you will take the total expense and multiply them by the percentage of time the house was leased in the financial year to get the deductible amount.

If the house is only partially leased then you will use the leased percentage + the square footage percentage to work out the deduction. Example, if council rates were $4,000 and 50% of the house was rented out for 30% of the year, the rates deduction would be $600.

Tax Rate

The net profit from your Airbnb activity will be added to your taxable income and taxed at the prevailing personal tax rates for the year.

Capital Gains Tax Considerations

If you are moving out of the house for an extended period, then the 6 year absence rule may apply and the eventual sale of your main residence will not have any CGT consequences.

If you just Airbnb your house occasionally then you won’t be able to use the 6 year rule as you are not technically ‘absent’ from your house. 

In this case you will obtain a market appraisal at the time you start airbnb’ing your house and you will work out the CGT based on the time your house was rented out over the ownership period. 

Example, Market appraisal on $1m at the time first rented out, sell 2 years later for $1.2m, rented out the whole house on Airbnb for the whole 2 year period. Owned for 10 years total. Capital gain = $40,000 (20%). You can then apply the 50% CGT discount and pay CGT at regular personal rates.

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