Listing a spare room, a granny flat or a holiday house on Airbnb or Stayz is easy. The tax that follows is less so: the income is assessable from the first booking, deductions have to be cut down to the days and the square metres guests actually use, your home's capital gains tax exemption can be dented, and in Victoria there is now a state levy on every booking.
The income is assessable — all of it
The ATO's rental income page lists short-term rentals, bookings through a sharing platform and renting out part or all of your home as income you must declare. So are bonds you keep, booking fees you retain when a guest cancels, insurance payouts for damage or lost rent, and amounts a guest pays you for repairs. Declare it in the year the guest pays — including payments the platform holds before releasing to you — and in proportion to your legal ownership.
Apportioning deductions by time and area
Only expenses that relate solely to the rental — platform commissions, advertising, cleaning between guests — are fully deductible. Everything else (loan interest, rates, insurance, body corporate fees, utilities, capital works and depreciation) must be cut down on a fair and reasonable basis, which in practice means two formulas.
Time-based. Days rented plus days genuinely held for rent on commercial terms, divided by the days you owned the property in the year. A holiday house actively marketed through an agent and used by you for 30 off-season days is held for rent the other 335. One let only to occasional word-of-mouth guests is held for rent only on the days it is occupied.
Area-based. If you rent part of your home, the deductible fraction is the floor area guests have exclusively, plus half the shared areas they can use, divided by the total area. A 10 square metre room with access to 50 square metres of shared space in an 80 square metre unit gives 43.75%.
Rent a room in your own home and the two combine, with a sting: on days the room is empty it is treated as your private space, so "days held for rent" is zero even if the listing is live. The ATO's example — a room let for 100 days — lands at 43.75% × 27.4% = 11.99% of the household costs, plus 100% of the platform fees. This is why spare-room hosting rarely produces a tax loss.
A property that is mainly for your own family's holidays, with rental as a side effect, may not get ownership deductions at all. The test is whether it is used, or held, mainly to produce rental income — blocking out peak periods for yourself and accepting whatever is left is a warning sign. Our rental property deductions guide covers the individual expense categories.
Renting part of your home and CGT
Your main residence is exempt from capital gains tax only while it isn't used to produce income. Rent out a room or a self-contained section and the exemption becomes partial: the taxable portion of any gain is the income-producing floor area multiplied by the fraction of your ownership period it was rented. The ATO applies an "interest deductibility test" — if you would have been entitled to claim part of your home loan interest, that part of the home is subject to CGT, whether or not you actually claimed it. If you first start renting out part of your home after 20-08-1996, you are taken to have acquired it at market value on that day, so get a valuation when the first guest arrives.
If you move out and rent the whole home short-stay, the six-year absence rule may let you keep the exemption; see our CGT on property guide.
GST: residential rent is input taxed
Rent from residential premises is an input-taxed supply. You don't add GST to the nightly rate, you can't claim GST credits on platform fees, cleaning or repairs, and short-stay income does not count toward the GST registration threshold. GST applies only if you operate commercial residential premises — a hotel, motel, hostel or boarding house. A house or unit let for short stays is still residential premises.
Victoria's short stay levy
Since 01-01-2025 Victoria has charged a short stay levy of 7.5% of the total booking fee on stays of less than 28 consecutive days in Victorian short-stay accommodation. Who pays depends on how the booking was made:
- Through a platform (Airbnb, Stayz, Booking.com and similar): the platform is liable, collects the levy and lodges the returns.
- Directly — your own website, repeat guests, word of mouth: you, as owner or tenant, must register with the State Revenue Office, lodge returns and pay. Returns are annual (due 30 January) if booking fees for the property are under $75,000 a year, and quarterly if they reach that figure.
The booking fee includes the nightly rate, cleaning fees, GST and any late-checkout charge, but not card surcharges or charges for damage. Your principal place of residence is excluded, as is a room that can't be occupied separately from the main house, and commercial accommodation such as hotels. If your property is excluded, tell the platform so it doesn't apply the levy. The levy is a cost of earning the rent, and the State Revenue Office notes that GST does not generally apply to state taxes.
The platform reports you to the ATO
Under the Sharing Economy Reporting Regime, platform operators that take payments for short-term accommodation have had to report supplier income to the ATO since 01-07-2023, twice a year (31 January and 31 July). If your return shows nothing where the platform shows $18,000 of payouts, expect a letter.
The 2027 negative gearing and CGT changes
From 01-07-2027 negative gearing on residential property investments is limited to new builds, and the 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation and a 30% minimum tax rate on gains accruing after that date. Properties held at 7:30pm AEST on 12-05-2026 are exempt from the negative gearing change, and the CGT change applies only to gains accruing from 01-07-2027. The ATO states these changes do not affect the 2025–26 return.
Records
Keep platform payout reports, a calendar of rented, available, blocked and personal-use days, evidence of advertising, floor-area measurements, expense invoices, loan statements, the purchase contract and a valuation from the day you first rented part of your home. Keep them for five years and, for CGT, until five years after you sell. Our rental property checklist lists what we need each year.
What SMT does
We reconcile platform payouts to income, build the time and area apportionment so the deductions survive review, calculate the CGT effect of renting part of your home, confirm whether the Victorian levy is the platform's job or yours, and lodge the return. Many of our short-stay clients are along the Murray, so our Echuca-Moama team handles plenty of these — on both sides of the river.
Sources
- ATO — Rental income you must declare
- ATO — How to claim rental expenses (apportionment)
- ATO — Renting out all or part of your home
- ATO — Using your home for rental or business
- ATO — Residential premises (GST)
- ATO — What is the SERR?
- ATO — Reforming negative gearing and capital gains tax
- ATO — Records for rental properties and holiday homes
- State Revenue Office Victoria — Understanding the short stay levy
- State Revenue Office Victoria — Calculate the short stay levy
Frequently asked
Do I pay tax on Airbnb income in Australia?
Yes. All rental income — short-term, through a platform, from part or all of your home — is assessable and goes in your tax return in the year the guest pays you or your platform. Retained bonds, cancellation fees you keep and insurance payouts for lost rent are income too. Declare it according to your legal share of ownership.
What Airbnb tax deductions can I claim?
The portion of interest, rates, insurance, utilities, body corporate fees, depreciation and capital works that relates to the days the property was rented or genuinely available, and to the floor area guests use. Platform fees, advertising and cleaning for guests are fully deductible because they relate only to the rental. Personal-use days and blocked-out periods are not deductible.
What are the Airbnb tax changes 2026?
Two things. From 1 July 2027 negative gearing on residential property is limited to new builds, with properties held at 7:30pm AEST on 12 May 2026 exempt, and the 50% CGT discount is replaced by cost base indexation and a 30% minimum rate on gains accruing after that date. For the 2025–26 and 2026–27 returns nothing has changed yet.
What is the short stay levy in Victoria?
A 7.5% levy on the total booking fee for stays of less than 28 consecutive days in Victorian short-stay accommodation, from 1 January 2025. If the booking is made through a platform such as Airbnb or Stayz, the platform collects and pays it. If you take bookings directly, you register with the State Revenue Office and lodge returns yourself. Your own principal place of residence is excluded.
Does GST apply to Airbnb income?
No. Rent from residential premises is input taxed, so you don't charge GST on it and you can't claim GST credits on related costs such as platform fees, cleaning or repairs, regardless of your turnover. GST only comes in if you run commercial residential premises such as a hotel, motel or boarding house.
Does Airbnb report my income to the ATO?
Yes. Under the Sharing Economy Reporting Regime, platforms that take payments for short-term accommodation have reported to the ATO since 1 July 2023, twice a year. The ATO data-matches this against tax returns, so unreported bookings are easy to find.