• New Wave Accountants

Airbnb Hosting in Numbers: Tax Obligation You Need to Know

The Airbnb company continues to strengthen the sharing economy, as its business nature allows even the smallest of business owners thrive. It works by matching property owners with potential tenants, making it the perfect companion to travel expeditions. Guests are given the liberty to choose price points and location, and as a landlord, you are given the power to set your own prices, rules, and of course, decorate the spaces according to your preferences.

Although business is booming, the tax industry continues to try and understand one crucial aspect of the Airbnb landscape: how are transactions taxed? Given the flexibility of the Airbnb scene, however, many Airbnb property owners do not fall under the business taxation rules.

Airbnb in Australia can be incredibly complex, and while an extra income flow is most welcome, most Australian Airbnb hosts do not realise the effects and benefits of taxes. To learn more about the hows and whys of Airbnb ownership in Australia, here is a quick guide for you:

Understanding Airbnb and Taxes: The Extent of Your Responsibility

Your first year of Airbnb will earn you untaxed earnings, allowing you to save as much as 40 percent of your net earnings. This will depend on the total income you earn, however, along with the number of tax deductions you’ve gathered from other incomes.

Renting out a spare room or property will indeed bring in some extra cash, but you need to remain aware of your tax obligations—there is much to gain, but also a lot to lose. To highlight the good side, however, here are some tax perks you can enjoy:

  • Mobile phone costs and internet

  • Utility rates (water and power)

  • Repairs and upkeep

  • Depreciation of the value of equipment and furnishings

  • Mortgage interest

These are just a few of the tax benefits you can enjoy, but it’s vital that you keep a detailed record of the rental timelines. Your records must be correct, as it is necessary for the collection of your claim expenses.

You need to save all the receipts and keep notes of what the items are for, especially when it comes to repairs, maintenance, and other investments. You don’t need to organise everything, just make it a habit to save evidence pieces!

The Downside of Up: Extra Income Means Extra Taxes

Adding a new source of income, especially like Airbnb, means that you enjoy a little more income flow—but don’t treat it as spending money. Earning more means more tax charges at the end of the year, so it’s important to save enough to properly pay your taxes on time. That way, you avoid any penalties.

Making Your Airbnb Income Worth It

If you wish to enjoy a small income brought by Airbnb rentals, it’s imperative that you understand the tax implications of becoming an Airbnb host. That includes tax obligations and perks, which includes the importance of saving your expense details, such as receipts and notes. It also entails knowing and understanding that more income means more taxes, so pay your taxes accordingly!

If you require the services of Gold Coast accountants, New Wave Accounting has you covered. We specialise in helping you achieve end-to-end accounting and bookkeeping services, no matter the business nature. We tailor our services according to your needs, ensuring that you gain only the best possible results. Book a consultation with us today.

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