Expenses encountered by Airbnb hosts
– Part 4
It assumes the Airbnb accommodation was ‘genuinely available for rent’ for the entire income year.
A. Deductible in full
- Host service fees (3%)
- Photography costs (if any)
- Decline in value for furnishings, furniture and appliances used solely for Airbnb accommodation
- Linen and laundry costs solely for Airbnb accommodation
- Food for guests (e.g., breakfast, snacks, water mints)
- Repairs (to Airbnb area)
B. Non deductible
- Private food and clothing costs
- Decline in value for furnishing, furniture used in private areas of the home
- Repairs (to private area)
B. Deduction (apportioned)
- Utilities (gas, electricity)1
- Wi-Fi and home phone costs1
- Decline in value for furnishings, furniture and appliances used in shared areas of the home1,2
- Mortgage interest, insurance, council and water rates3
- Gardening costs (assuming guests have shared use)1
- Cleaning costs (covering private and Airbnb areas of home)1 1. A reasonable method must be used to establish the income producing use of costs incurred in running the home (utilities etc.) and depreciating assets. Refer to ATO document: ‘Home – based businesses. Note also that the tax consequences on disposal of depreciating items should be considered.
2. Only a partial main residence exemption may be available on the eventual sale of a dwelling where occupancy expenses (e.g., mortgage interest) were claimable in relation to the home – refer below.
3. In some cases, the Airbnb host will be able to claim a capital works deduction under Division 43. However, whether or not this is the case depends on when the construction expenditure was incurred (as the rules differ depending on when the relevant works began). If a deduction is available, it is reduced to the extent the home is used other than for income-producing purposes. Refer, for example, to S.43-210. Further note that an entitlement to claim under Division 43 may result in the taxpayer being required to reduce the cost base and reduced cost base of the home. Refer to S.110-45.