• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar
  • Skip to footer

Align Financial

Helping you make smart decisions about your money

  • Your Financial Future
    • Financial Goals
    • Financial Planning
    • Financial Literacy
  • Financial Services
    • Financial Advice
    • Suddenly single
    • Retirement Planning
    • SMSF Advice
    • Estate Planning
  • About Us
    • Our Team
    • Case Studies
    • Community
    • Media Appearances
    • Align Financial Reviews
  • Resources
  • Blog
  • Contact
  • T: 02 9913 9995

Financial Literacy · August 9, 2018

Airbnb and Tax – is it even worth it?

Lounge room
Photo by Nathan Fertig on Unsplash

We are living in the era of a ‘share economy’ where access to goods and services can often be peer-to-peer, facilitated by apps and online platforms. Airbnb is reportedly worth around $31 billion dollars according to Forbes and it’s easy to see why. There are nearly 5 million lodging options and that number is not getting smaller with more and more Australians considering the opportunity to lease part of their homes to supplement their income.

It might appear, at first, as easy money. Simply advertise a room, take on some extra cleaning and linen changes, and watch the money roll in.

But it’s important to remember an increase in income can also affect the level of tax payable. Ensuring you put enough money aside come tax time so you don’t get a nasty shock, may make you reconsider whether all the trouble is worthwhile.

Net rental payments are taxable

The net rental amount you receive (after expenses) is treated as a taxable amount in the year that you receive the income.

That taxable income will be in addition to any other taxable income, e.g. your salary or wages. In other words, the net rental income you receive will be taxable at your marginal tax rate.

Don’t fall into thinking you can avoid disclosing rental income because Airbnb are required to share data with the ATO!

Main residence CGT exemption

Your main residence is generally exempt from Capital Gains Tax (CGT), but using your home for income-producing purposes may impact on the main residence capital gains tax (CGT) exemption. So renting out a room may have additional tax consequences to the assessment of the rental income alone.

The main residence CGT rules apply to reduce the level of exemption based on the proportion of the dwelling and the amount of time that it is used for income producing purposes.

Summary

Although leasing out part of a home may seem like an easy way to generate additional income, the tax implications should be understood and contemplated in the decision to offer the property for lease.

Income tax, PAYG and CGT implications may significantly erode the net benefit.

What Can Align Financial Do For You? Visit our homepage to learn more about our service. If you would like to speak to us about your financial circumstance, please feel free to give us a call on 02 9913 9995. We are located in Narrabeen on the Northern Beaches of Sydney.


Disclaimer: This post has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions. Align Financial | Financial Planner Northern Beaches | Servicing North Narrabeen, Narrabeen, Mona Vale, Elanora Heights, Newport, Avalon, Palm Beach | Enquire with us online.

Filed Under: Financial Literacy Tagged With: financial advice, financial planning, income, supplement income, tax, tax implications, taxation

Align Financial

Primary Sidebar

Search our blog

RSS Align Financial Blog

  • The Difference Between Investing and Gambling
  • Have you entered our Stock Picking Charity Challenge?
  • 10 actions that bring happiness
  • 2020-21 Federal Budget: 3 Key Take-Aways
  • To hedge or not to hedge?

Archives

  • March 2021
  • February 2021
  • January 2021
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • March 2020
  • February 2020
  • December 2019
  • October 2019
  • September 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • May 2016
  • March 2016
  • July 2015

Categories

  • Case Studies
  • Financial Literacy
  • Media
  • News

Sign up for our newsletter

  • This field is for validation purposes and should be left unchanged.

Footer

Get in touch

Contact Us

  • Facebook
  • LinkedIn
  • Twitter

Your Financial Future

  • Financial Goals
  • Financial Planning
  • Financial Literacy

Financial Services

  • Financial Advice
  • Suddenly single
  • Retirement Planning
  • SMSF Advice
  • Estate Planning

Resources

  • 60 seconds with…
  • Case Studies
  • Community
  • Align Financial Reviews
  • FSG
  • Privacy
  • Disclaimer
  • Sitemap

Copyright © 2021 Align Financial Pty Ltd   ·   ABN 81 105 999 602   ·   AFSL 287347