Airbnb Tax Implications: Tax Deductions & Accounting Tips for Airbnb Hosts

Finding accommodation in this day and age has become easier thanks to Airbnb. This is a platform that allows property owners to host guests at a fee. Recently, there was a chatter introduced in regard to sharing economy activities. As such, tax experts have continued to have a clear direction on how such transactions are taxed, including Airbnb.

Do you have a property that you have been letting out through Airbnb? The taxation issues may be a bit complicated and this is why you will need the services of experts like Accurate Business & Accounting Services. Besides the tax, there are deductions that you can also claim and we will take a look at this in detail.

Tax Returns and Deductions for Airbnb Hosts

When you make money from letting out your property, through Airbnb, the income is assessable. The main reason is the fact that you have advertised your property to the public. In some instances, where you are making losses, the ATO may argue that your property is not meant for commercial rent.

With accurate tax records, you can make claims for deductions on the expenses that are directly related to the Airbnb rental income. If you have rented out part of the property, you will apportion the expenses appropriately for the space used. Generally, Airbnb expenses are grouped into 3 main categories, namely:

  1. Apportioned expenses for share areas
  2. Full property rental expenses
  3. Direct expenses for the private area of the host

Some of the expenses that can be deducted in totality include:

  • Repairs and maintenance
  • Depreciation of the furniture used
  • Cleaning expenses for rented area
  • Meal provisions for guests
  • Service fees charged

How to Handle Expenses that Affect the Whole Property

There are some expenses that cannot be confined to a particular area as they relate to the entire property. In such cases, you will need to apportion them using the floor area. Some of these expenses include:

  • Utilities
  • Insurance
  • Council rates
  • Mortgage

Expenses Are More than Income

With Airbnb, it is possible to make losses, where your expenses are more than the rental income received. Such a loss should be claimed against other incomes that you have including your employment income. However, in such cases, you will need to have a strong case as the Australian Taxation Office may attempt to show that you are not charging commercial rent.

Is Goods and Services Tax Necessary for Airbnb Business?

Airbnb is a business that generated residential rents, which are not subject to GST. As such, you will not need to register for goods and services tax. Additionally, it is important to note that you are not eligible for any GST credit claims. 

Keep Your Records Properly for Tax Purposes

If you have interacted with the ATO in the past, you will agree that records are very important, especially when making tax deduction claims. As such, to ensure the maximum tax refund ensure that your records are in order and up to date. Detail out all incomes earned and the expenses related to the business.

Let the Experts Help You with Airbnb Tax Matters

As you can see, there is some level of complication when it comes to Airbnb taxation. However, you have no cause to worry as Accurate Business & Accounting Services is ready to help you. We will work with you to ensure that the tax returns are accurate and all deductions have been claimed. Talk to us today for more information and to get started. 

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