Tax Matters For Your Airbnb Room Rental

It’s important to realise that there are some tax consequences. It’s nothing too bad… Just things to be aware of.

Many people are now renting out spare rooms on Airbnb. We love this idea – it’s a fantastic way to earn some extra cash on the side.

But, it’s important to realise that there are some tax consequences.

It’s nothing too bad… Just things to be aware of.

It’s taxable

Firstly, you need to know that the income you’re receiving from that Airbnb is taxable income. It will need to be recorded and put on your tax return at the end of financial year.

Don’t worry, you can claim some of the expenses related to the rented room as tax deductions. This can include most things that directly relate to that room, such as cleaning of the room or any food or gifts you may provide for guests.

Not all expenses are deductible

When it comes to the other expenses for your property, like electricity and water, it gets a bit trickier.

These utilities need to be apportioned based on how much of the property’s rented out, how much of the property’s shared, and how much of the property is private.

Capital gains considerations

The main thing to note here is that renting out a room DOES impact your capital gains tax exemption from your main residence.

What people aren’t always aware of is that the capital gains tax exemption cannot cover the portion of your house that’s being rented out. When it comes to keeping your records, you need to be very detailed so that it’s easy for your accountant to determine what portion of your capital gain is now going to be taxable to you.

The 50% discount will still apply, but unfortunately you will have some capital gains tax consequences.

This is very different, of course, to if you rented out your entire property, be it on Airbnb or directly through an agent. In this case, you’re no longer in the property, so you do have the full main residence exemption there.


To speak to a property tax specialist, contact the tax champions on (03) 8393 1000 and we can arrange a no-obligation, free initial consultation.

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