Airbnb Hosts and Tax Implications: Income and Capital Gains Tax

Income Tax and Capital Gains Tax on Airbnb Income.

The Australian Tax Office [ATO] has made it clear that people who rent rooms out in their properties need to declare all rental income in their tax return.

It has also been pointed out that people who rent out rooms etc, such as using the Airbnb service, may also be liable for Capital Gains Tax from sale proceeds of rented properties.

The Australian Financial Review created this following example:

A couple bought their property for $1.5 million, 10 years ago and sell it now for $3 million. They have rented out a bedroom and bathroom for four years (via Airbnb), and have worked out that this space is equivalent to about 15 per cent of their property.

(For CGT calculations, we’ll also need to know how much they earn: One is in the top tax bracket, earning more than $180,000 a year, and the other earns $67,500.)

Their capital gain is $1.5 million. Of this, 15 per cent is subject to CGT (being the proportion of the area of the property rented out) ?? that’s $225,000.

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That example results in a Capital Gains Tax of $225,000 at the sale of their property, in addition to all income taxes for all the Rental Incomes over the years.

Ensure you look into ALL aspects of any additional income.

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