Tax Deductions for Airbnb property

What depreciation can you claim in your Airbnb investment property?

What are Airbnb properties in Australia?

In Australia AirBnb’s are a now legal way of renting a portion or entirety of your property to guests on a short term basis. The AirBnb platform has disrupted the holiday letting industry significantly. Essentially cutting out the middleman and putting the property owner in control of the letting process. Of course there are fees involved, but they are typically a lot lower than the traditional rental method – which can see fees off 10% or more from every transaction going to the real estate company.

What you should provide guests in your Airbnb property

What you provide will largely depend on what you offer in your listing and the location of your property.
For example: Inner city properties may offer a parking space and full access to the common areas like the swimming pool, sauna and gymnasium. While a beachfront property may offer full use of the watersports equipment like surfboards, snorkeling gear and even push bikes.

But the items commonly found in virtually every Airbnb include;

  • Crockery, Cutlery and Glassware
  • Beds and Bedding
  • Washing and Drying facilities
  • Entertaining devices like TV’s DVD players, Radios
  • Iron and Ironing board
  • Refrigerator and some appliances
  • Furniture

Do you need to setup a company name to operate AirBnB properties?

No. You do not need to setup a company name or any other taxation structure to operate an AirBnb. In fact, the majority of my clients own the Airbnb in their own names and is sometimes even their principal place of residence

Do you need to charge GST on your AirBnB rental property?

No you do not charge GST on your AirBnb property. That’s because Airbnb falls under residential taxation laws. This means GST is not applicable to Airbnb, no matter how much income the property generates.

Other tax deductions in an Airbnb that don’t go into a tax depreciation schedule

Deductible items not accounted for in your tax depreciation schedule are still claimable through your accountant. All you need do is provide these costs to your accountant each time you get your tax return completed.

Some common items include;

  • Platform admin costs
  • Cleaning costs
  • Third party management costs (if you want to be more handsoff)

Claiming tax depreciation for your entire AirBnB rented property

Renting out your entire property via AirBnb or similar platforms is very common. Especially in holiday locations like Stradbroke Island, North Queensland and beachside locations in northern NSW

This will not affect your tax deduction entitlements at all – but if it is your principal place of residence that you’re renting out – you may become liable to pay CGT in the future. There are many rules around CGT on principal place of residence so it’s best to speak to a qualified quantity surveyor and accountant who can provide you with certain guarantees.

Claiming depreciation for a portion of your property

b>You can claim portion of your property as a tax depreciation deduction – so long as you are genuinely offering the portion of the property for rent.

Here’s how that would look for a house renting out a bedroom to a uni student:

Let’s say you have a 3 bedroom 2-bathroom, 2 car garage home near one of the universities. You only need one bedroom plus a spare for your lego collection. So choose to rent out one room and bathroom on AirBnb to an international uni student.

Here’s what you can claim:

You can claim the full depreciation on the bedroom and bathroom. Plus you can claim a portion (50% in this case) of the depreciation on the shared areas like the kitchen, lounge room and even garage…if you included a parking space in the rental agreement.

So the more of your property you include in the rental agreement, the more you can claim as a tax deduction. But only if it’s genuine and there could be tax implications for you further down the road if you sell your property. But a good Accountant will be able to advise and navigate that for you

Claiming depreciation on vacant Airbnb property

Vacant properties are just as good depreciation wise, as a fully leased property. That’s because the ATO allows you to claim deductions for every day the property is rented or available for rent.

Note:You do need to be able to prove the property was available for rent and that your not using the property for personal use. A simple way to prove it is by keeping records of your online listings for the property.

For Example: If you have an Airbnb property and you have guests for 200 days of the year and a for rent listing on the platform for the remaining 165-days, you are fully entitled to claim the entire 365-days as tax depreciation deductions.

Claiming Shared use items as tax deductions

Sharing the use of items with your guests is very common.. And completely ok with the ATO. All you need do is account for the percentage of personal use. This percentage may change from year to year, so the best thing to do is have your Quantity Surveyor prepare the report at full depreciation value – then have your accountant apply the correct percentages to each tax return.

Best accommodation platforms for tax deductions

No platform is better than another when it comes to tax deductions. That’s because all properties fall under the same ATO legislation with the ITAA 1997 ruling. Therefore, the same items are deductible at the same rate over the same period of time regardless of which platform you choose.

Of course, if one platform is more expensive to use than another, it will achieve higher tax deductions (but also lower profit margin).

alternative accommodation platforms to Airbnb

AirBnb has a lot of competition now – and a lot of undercutting on admin fee. So here’s a top 5 list of the most popular alternatives to AirBnb here in Australia

    • 1. Stayz: Stayz is one of the most popular vacation rental websites in Australia, with over 40,000 properties listed across the country. It offers a range of accommodations, including apartments, houses, and villas.

I’ve personally inspected as many Stayz properties as I have AirBnb properties on the Gold Coast, Brisbane and Sunshine Coast

    • 2. HomeAway: HomeAway is a global vacation rental platform that connects travellers with property owners in over 190 countries, including Australia. It has over 1 million listings worldwide and offers a range of accommodations, from budget-friendly to luxury.

I’ve not actually ever inspected a HomeAway property – but I look forward to the day

  • 3. While primarily known for hotels, also offers a range of alternative accommodations, including apartments, vacation homes, and villas. It has a large selection of properties in Australia and is a popular choice for travelers looking for a wider variety of accommodations.
  • 4. TripAdvisor Rentals: TripAdvisor Rentals is a vacation rental platform that offers a range of properties across Australia, from beachfront villas to cozy cottages. It’s part of the larger TripAdvisor platform, which allows travelers to read reviews and compare prices before booking.
  • 5. FlipKey: FlipKey is a vacation rental website owned by TripAdvisor that offers a range of properties in Australia. It’s known for its easy-to-use platform and features a wide range of accommodations, from budget-friendly to luxury.

Airbnb versus normal leasehold rental

Choosing between renting out your property on a platform like Airbnb or renting out via more traditional methods is a personal choice. It will really come down to what you want out of the property and how involved you want to be in the day-to-day management of your property.

I have friends who have switched to AirBnb style platforms and I have clients who’ve moved away from the platform. Choosing the easier option of leasing the property out through a real estate agent.

Things to factor in when choosing between Airbnb type platforms and traditional leasehold arrangements

  • Demand for short term accommodation in your area (if low, consider leasehold)
  • Weekly rental yield for Leasehold verse averaged rental yield for short term renting
  • Can you afford for the property to sit vacant for extended periods?(if not, think leasehold)
  • Do you wish to use the property yourself during the year? (holiday locations)
  • Airbnb style requires more of your time and energy to run. Do you have the time?

When to get a depreciation schedule for an Airbnb property

Guest comfort is the most important thing to factor in. So the best time to get your depreciation schedule for your Airbnb is in between guests. Ideally in off-peak season if your property experiences fluctuations in demand during the year.

But definitely don’t wait more than 2-years from the date you first offered your property for lease in the AirBnb platform.

Sunshine Coast AirBnB

Pomona 2009 Built House. Split in two for Air Bnb accommodation
$6,990 in 1st year
$27,960 in 5 years
All original

Have any Questions?

Simply get in touch with me here and I’ll personally address any questions you have.

If you found this helpful, you may also find some of my other articles beneficial too. And to see some real life examples of what our clients have been receiving in tax depreciation deductions, check out our Client Portfolio page. But it’s usually best to start at the beginning by visiting our home page

This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying

Published April 2023