Airbnb Tax Australia: How To Claim Airbnb Tax Deductions

Have you ever calculated how much money you lose by incorrectly handling your Airbnb tax deductions?

How many expenses have slipped through the cracks simply because the process wasn't done right?

If you've ever faced this and didn't like the number you saw, you're in the right place!

In this article, you'll learn how to claim Airbnb tax deductions, which expenses you can claim and how to simplify the entire process with one easy-to-use tool!

Let's start!

Which Airbnb Expenses Are Tax-Deductible?

First, let’s take a look at the tax-deductible expenses you can claim:

🟢 Local council rates for the property

🟢 Interest paid on a loan used to purchase the property

🟢 Utility bills, including electricity, gas, and water

🟢 Property insurance, including building and contents coverage

🟢 Expenses for cleaning and maintenance, whether for supplies or professional cleaning services

🟢 Potential full deduction of platform service fees or commissions

The amount of the expense that can be claimed depends on:

🟢 Percentage of the house or property that you have rented out (for example, a room or the entire property)

🟢 Number of days rented out every year

How To Claim Airbnb Tax Deductions?

Let’s cover 3 steps on how to claim tax deductions!

Step 1: Collect Income Records from Airbnb

Gather any statements and records of payments made through Airbnb. This includes booking confirmations and payment summaries.

To do that, follow these steps:

▶️ Click Today > Menu > Earnings

▶️ Click View the earnings summary, and then Get the CSV report

▶️ Select the appropriate filters

Step 2: Organise Expense Receipts

Maintain detailed records of all costs, including utilities, cleaning, maintenance, insurance, and mortgage interest, in order to correctly claim tax deductions related to Airbnb.

You have to divide these costs according to the percentage of space used and the duration of the rental.

If you only rent out part of your home or for a few months a year, your tax deductions won’t be as high as if you rented the whole place year-round.

For example, you can only claim 10% of shared expenses if a room that occupies 20% of your house is rented for half the year.

Maintaining digital documents, bank statements, and receipts helps to optimise deductions and assure compliance.

Step 3: Use ATO’s myTax system 

Follow these steps:

1. Start by Adding Rental Income ✔️

▶️ Visit the ATO site.

▶️ On the return screen, select “Rent”.

▶️ Click “Add” to include property details and expenses.

▶️ Claim only for the period when the property was available for rent.

2. Enter Property Details ✔️

▶️ Input the date the property was ready for tenants.

▶️ Claim only for the period the property was available for rent.

▶️ Enter the number of weeks the property was rented.

▶️ If you are not the sole owner of the property, enter your ownership percentage. When you do that, “myTax” will split the amounts entered equally.

3. Enter Asset Depreciation (For Large Purchases) ✔️

▶️ If you purchase a major asset (e.g., an oven for the rental), you can’t claim the full cost immediately.

▶️ Use the Depreciation and Capital Allowances Tool to track the decline in value over time.

▶️ Enter the date the property was purchased, the date the asset was acquired, and the cost of the asset.

▶️ The tool automatically calculates the effective life (e.g., 12 years for an oven).

▶️ Click "Save to myTax" to update your tax return.

4. Include Income and Expenses ✔️

▶️ The tool will populate depreciation figures automatically.

▶️ If you used a quantity surveyor, enter the total depreciation value manually in the "Total capital allowances manually calculated" field.

▶️ Enter your total rental income and expenses, including:

▶️ Keep all receipts and statements in case the ATO requests them.

5. Submit Your Tax Return ✔️

▶️ myTax will automatically calculate net rent and your share of net rent

▶️ If you have another rental property, click "Add" to enter additional details

▶️ Once all income and expenses are entered, click "Save and continue."

What Are Some Tax Myths That Could Cost You?

We all like to believe things that make our lives easier.

Wishful thinking, however, can result in legal issues when it comes to taxes.

Let’s clarify some costly myths before they catch up with you:

1. "The ATO won't know if I don't report my Airbnb income." ❌

They will.
The ATO has specifically cautioned rental property owners about the implications of failing to declare rental income, including revenue from platforms such as Airbnb.

They use data-matching algorithms to uncover disparities between reported and real earnings. The ATO has discovered that a considerable number of property owners make errors on their tax filings, including underreporting income.

2. "If I set my property as ‘available for rent,’ I can claim deductions even if no one books it."  ❌
According to the ATO, your home must truly be available.

Deductions could be refused if your listing has unreasonable costs, irrational restrictions, or is only available for short periods of time.
3. “Capital Gains Tax (CGT) doesn’t apply to Airbnb properties.”  ❌
If you rent out all or part of your main house, you may lose some of your CGT exemption when you sell the property.

The ATO considers Airbnb rentals to be an income-generating activity; therefore, CGT may apply when you sell.

3 Additional Tips on How To Claim Airbnb Tax Deductions

Keeping correct records is equally important as determining which expenses to claim.

The ATO is increasing its audits of rental property owners, so remaining organised can save you time, stress, and money.

Here are three essential tips  to help you claim your Airbnb tax deductions correctly and efficiently:

✅ Use Accounting Software or Airbnb’s Transaction History for Tracking

Keeping track of your Airbnb earnings and costs does not have to be a problem.

The trick is to keep organised from the beginning so that tax season does not catch you off guard.

One of the simplest methods to accomplish this is to use accounting software.

These tools may automatically track your transactions, categorise spending, and even generate reports, allowing you to always know where your money is going.

If you are not a fan of accounting software, don't worry.

Airbnb has a transaction history tool that allows you to get complete payout records, service fees, and booking summaries.

If you export this data regularly and cross-check it with your bank statements and receipts, you can make sure that no deductions are missed.

When all of your financial records are in one place and up to date, tax time becomes much easier – and you'll be prepared if the ATO ever comes knocking.

✅ Save Receipts, Invoices, and Bank Statements

When it comes to Airbnb tax breaks, paperwork is your best friend.

The ATO won’t accept your word for it – you must prove each expense you claim.

This means having receipts, invoices, and bank statements available. 

Without them, you risk losing significant deductions or perhaps getting into trouble if the ATO decides to investigate further.

The simplest approach to keep track of this is to create a basic system.

Whether it's a folder on your computer, a tracking software, or solutions like Google Drive can help you back up your records and keep them secure and easy to retrieve.

💡 Pro Tip

ANNA can help you with expense tracking and categorisation! How?

ANNA allows you to:

⚡ Capture receipts instantly by snapping a photo, ensuring that any expenses linked to your Airbnb home are recorded promptly

⚡ It organises and categorises transactions automatically, making it easier to discover deductible items like utilities, maintenance, and cleaning services.

✅ Separate Your Airbnb Finances from Personal Expenses

Combining your Airbnb profits with your personal finances might make tax preparation a nightmare.

Every transaction, whether it's an Airbnb payout or a deductible item, becomes lost in the shuffle of personal spending, making it difficult to track what you actually earned and spent.

To stay structured, create a separate bank account for your Airbnb business.

This way, all of your rental revenue and expenses will be in one location, making it easy to analyse your cash flow, manage tax deductions, and keep accurate records.

Furthermore, if the ATO ever audits you, having a dedicated account simplifies the procedure and gives a clear paper trail to back up your claims.

💡Pro Tip

With an ANNA Money business account, you can separate Airbnb income and costs from personal spending, making it easier to track transactions and stay organised during tax season. 

Instant payment notifications ensure you never miss a payout, and virtual and physical debit cards allow you to cover Airbnb-related expenses without combining them with personal spending.

Conclusion

Keep in mind that if you rent out your house on Airbnb or another platform, you must declare the income to the ATO.

This applies if you're renting out a complete house, an apartment, or simply a portion of your home. 

Even if you live in the property while renting it out, you must still report your income.

The key to maximising Airbnb tax deductions is to have a complete understanding of your spending.

When you know which costs you can recover, the entire process goes much more smoothly.

On top of that, having everything in one place makes this process much easier.

The good news is that there is a tool for all that - ANNA Money! 🚀

How Can ANNA Help Simplify Your Airbnb Tax Deductions?

ANNA is an all-in-one business account for money, invoicing, spending, bookkeeping, and taxes.

At its core, this tool helps you manage your business more effectively!

ANNA will assist you with the following:

⚡ Invoice Management - Create and manage invoices for your Airbnb profits, keeping them structured and easily accessible.

⚡ Record-Keeping - Store all financial documents securely on the platform to ensure you keep accurate records

⚡ Comprehensive tax management - With ANNA Money, you can stay on top of your tax reporting and optimise your tax bill. Receive a personalised tax calendar and never miss another deadline.

⚡ Financial Reporting - Access real-time financial information to gain insights into your Airbnb rental performance. 

Sign up today and make your life easier!

FAQ

Do You Need an ABN to Rent Out on Airbnb Australia?

Whether you need an Australian Business Number (ABN) for Airbnb rentals depends on your situation:

From January 1, 2025, all short-term rental properties in Australia must be registered with local authorities and meet council requirements. Non-compliance could lead to removal from booking platforms.

If you rent out your primary home, you might qualify for a home-sharing exemption, allowing up to $10,000 tax-free annually, but this may require an ABN.

What Licenses Do I Need to Rent a Property on Airbnb?

The licenses and permits required for Airbnb rentals vary by region and rental type. Key considerations include:

Always check with your local council to ensure compliance with relevant regulations.

How Do I Determine If My Airbnb Rental Is Considered a Business or a Hobby?

In Australia, the ATO and local regulations determine whether your Airbnb rental is a business or a hobby based on several factors:

If you rent frequently or generate steady income, it’s likely a business. Occasional rentals for extra cash lean toward a hobby. Always check with the ATO for tax obligations.