Airbnb and the Hidden CGT Implications

Airbnb and the Hidden CGT Implications


Rede Accountants Gold Coast, Brisbane & Byron Bay

Airbnb is becoming a popular choice for some Australian families looking to earn some extra income. Spare rooms can be rented out without the longterm commitment of a housemate and holiday homes that would normally remain vacant for most of the year can start generating income.
Rent received from the leasing of your home and or part thereof on Airbnb, can not only have income tax consequences however more importantly potential significant Capital Gains Tax implications. A recent ATO case provides some important insights into what Airbnb hosts need to be aware of.
A big potential downside of using your residence to host Airbnb guest is that if you use your principal place of residence for income producing activities you may be subject to capital gains tax when you sell on the income-producing portion of your house.
Did you know, once you start hosting Airbnb guests:

  • Your house’s CGT cost base resets to today’s market value when you start using your home for Airbnb
  • Your Main Residence exemption will be impacted. You will need to consider pro rata exemption only. The residence is not eligible for the full main residence exemption while being used to host Airbnb guests.
  • The 6-year absence rule may not apply unless you have moved away from the residence being used as an Airbnb, you’re now residing elsewhere and you have changed your mailing addresses on your driver’s licences, electoral rolls, etc.
  • As case studies have shown, it is often the case that the revenue income earned from Airbnb is far less than the CGT savings had the home remained fully entitled to the Main Residence Exemption.

If you’re planning on leaving out the income or capital gain from your house or room renting activities we would strongly advise against this as the ATO data matching technology is improving every year and is starting to match data from the sharing economy with people’s tax returns.
If you want to know more about how Airbnb potentially impacts you, please contact our office here to discuss further.

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