Short Term Rental Properties

24th July 2018 | Tax Tip Tuesday

Are you currently renting out a room or your whole house on short term basis such as Airbnb or Stayz? If you answered yes, did you know that the income needs to be declared in your tax return?

Expenses can be claimed against rental income, but they need to be apportioned to reflect the relevant time period and actual use to match that income.

Most common expenses that you can claim include fees and commissions paid to the facilitator, council rates, property loan interest, electricity, gas, water, property insurance, cleaning and maintenance costs.

Renting out a part of a home

If you are renting only part of your house, for instance a single room and bathroom, you need to apportion the expenses accordingly. More often, expenses are apportioned based on the floor area used by the guest.

Remember that expenses can only be claimed during the period that either the room was rented out or when it is genuinely available for rent.

Renting out your main residence on an occasional basis

If you are renting out your residence on occasional basis, you can only claim the portion of expenses relating to the period that the property is genuinely available for rent or being when it is rented out. This situation may apply if you vacate the premises to allow paying guests to stay.  Under this circumstance the total expenses claimed need to reflect the relevant time period that the residence was rented out. Apportionment of claims will also be required if the part of the property is not available for guests’ use (ie. if you keep one room locked for your personal storage).

Tax implications when you sell your residence

Once you have used your main residence to earn income, you may not be able to claim the full Capital Gains Tax exemption when it is sold.

It is important to keep all records relating to the properties purchase and improvements and dates the property (or portion of the property) was rented.

To find out more about reporting your short term rental income and expenses, contact one of our advisors today!