Renting out your property on Airbnb

If you’ve travelled recently, you may have used Airbnb. It’s a cheaper alternative than staying in a hotel and you get to live as the locals do. Airbnb strikes the balance between comfort and culture. But it’s not just for travellers.

Airbnb is the world’s largest accommodation sharing website with over two million property listings. Many savvy homeowners are putting up their spare rooms or the whole house on Airbnb and making a healthy income from it.

It’s extremely popular in Australia, with guests staying 2.1 times longer than the average tourist, according to Sam McDonagh, Airbmb’s Australia National Manager

Opening your doors to tourists.

South Australia’s rules around the sharing economy are loose, especially compared to other states. This makes Airbnb a lucrative revenue stream if it’s something you’re considering. You don’t need to seek development approval if you’re thinking of supplementing your income by renting out your property.

The Sunday Mail recently published some pretty healthy numbers. The number of Airbnb operators in SA has grown by 46% to 45,000. The number of guests who stayed in an SA Airbnb grew by 102% to 155,000. The average Airbnb host in Adelaide is earning $6,100 a year – a combined $26 million, state-wide.

But what about tax laws?

Just like renting out your home to tenants, any profit you make through Airbnb is classified as assessable income. It needs to be declared in your tax return.

You can claim any expenses as tax deduction – such as council rates, water rates, and running costs that you’d consider with a normal investment property. Deduct any expenses relating to generating this rental income in your tax return, including depreciation of furniture, utilities, mortgage interest, repairs and maintenance, cleaning, new floor & window coverings and property management fees.

For activities related to Airbnb, you can deduct these expenses in full. For everything that’s a mix of Airbnb and personal use, the spending will need to be apportioned. If your income is more than your expenses, you’ll be taxed on the net rental amount. Otherwise, a rental loss will be able to be used to reduce your other income (negatively geared).

As a residential property owner, you’re exempt from GST. You won’t liable for GST on the rent charged. This also means you can’t claim back the GST on your Airbnb expenses.

If we can stress anything, it’s the importance of recording everything. Don’t rely on the Airbnb system. Find your own way to record your guests, how long they’ve stayed, and what area they had access to. This will make tax time much easier.

Any damage?

This is where the lines get blurred. When renting your property to someone, you’re entering a contract. As the host, you can impose terms and conditions that the guest must adhere to during their stay. This can include guests having good behaviour, paying a bond or security deposit, and being responsible for any damage they cause.

Even though Airbnb also provides Host Protection Insurance and a million-dollar Host Guarantee, it’s important to make sure you have your own insurance. Be honest with your insurance company and understand what you are and aren’t covered for in your policy.

If Airbnb still sounds like something for you, go through these steps.

Check your local council's rules and regulations
If you're a renter, check the conditions of your lease
Do some calculations. You want to make sure you won’t make a loss.
Set out clear terms and conditions and make sure you have a valid insurance policy

Create a system that helps you record all of your guests and the space used.