Australians have embraced the sharing economy with gusto and nowhere can that be seen more clearly than the rise of Airbnb. In Sydney alone there are over 38,000 listings on the website. But using Airbnb or Stayz to rent out part or all of your home as a home owner you may be unwittingly opening yourself up to tax liabilities. In particular:
- Tax on the income earned; and
- Putting at risk your Capital Gains Tax exemption for your principal place of residence and opening yourself up to Capital Gains Tax when you sell the property.
While renting your home, or part of it, may supplement your income and satisfy a positive social experience by having overseas visitors in your home, you may find if you live in an area where the value of your home has increased markedly that the Capital Gains Tax you may be liable for could well and truly outweigh any income you receive from renting your home or part of it.
ATO and Airbnb Sharing Data
The Australia Taxation Office has mechanisms in place to track people who are renting their home and you may well find the Australian Tax Office calls upon you to either disclose the income you have received and pay income tax on the income or Capital Gains Tax. These tracking mechanisms could also catch you when you sell the property. The ATO and Airbnb are sharing data so the threat is very real. If you are listing on Airbnb you may well be held to account over the income you are generating.
You should therefore clearly seek advice from your accountants and lawyers before you enter into any short term leasing arrangements on sites such as Airbnb and Stayz so you are fully aware of your liabilities to disclose the income and pay tax on it and to how the potential Capital Gains Tax may affect you when you sell the property.
Should you have any queries about the implications of the ATO and Airbnb sharing data, then please do not hesitate to call Julian Peters of our Property Team on 02 8987 000.