Airbnb and Short-Term Rental Tax Australia 2025–26: What Every Host Needs to Know

If you’ve been earning extra income by listing your home, investment property, or spare room on Airbnb, Stayz, or another short-term accommodation platform, the Australian Taxation Office (ATO) expects you to declare every dollar. With the ATO now receiving data directly from sharing-economy platforms, getting your short-term rental tax right in 2025–26 has never been more important — or more scrutinised.

Do You Need to Declare Airbnb Income?

Yes — without exception. All income earned from short-term accommodation is assessable income under Australian tax law, regardless of whether you rent out an entire property, a holiday home, or just a spare bedroom. This applies to bookings made through any platform (Airbnb, Stayz, Booking.com, Hipcamp) or directly with guests.

Report Gross Income, Not Net Payouts

A common mistake hosts make is reporting only the net amount deposited into their bank account after platform fees. The ATO requires you to declare the gross rental income — the full amount guests paid — and then separately claim eligible expenses as deductions.

Gross income includes:

• The full nightly rate charged to guests
• Cleaning fees collected from guests
• Retained bond money
• Fees from cancelled bookings
• Insurance payouts replacing lost rent
• Any tips, bonuses, or platform incentives

Platform commissions, service fees, and management charges are deductible separately — they should not simply be netted off your income figure.

What Expenses Can You Deduct?

Short-term rental hosts can claim a range of deductions, but the rules depend on how the property is used. The key principle: expenses must be directly connected to earning rental income.

Fully Deductible Expenses

If your property is rented out (or genuinely available for rent) 100% of the time, you can generally claim the full cost of:

• Advertising and platform listing fees
• Airbnb/platform service fees and commissions
• Property management fees
• Cleaning and linen costs
• Repairs and maintenance (not improvements)
• Council rates, water charges, and strata levies
• Landlord insurance premiums
• Interest on loans used to purchase or improve the property
• Depreciation on furniture, appliances, and fittings

Apportioning Mixed-Use Expenses

If you use the property personally for any part of the year — even a few weeks of family holidays — you must apportion your expenses between rental and private use. The ATO requires a fair and reasonable method, typically based on:

• Time: the number of days the property was rented versus used privately
• Floor area: if only part of the property is rented (e.g., a spare room), the proportion of the home’s total area

For example, if you rented your holiday home for 180 days and used it personally for 60 days (240 days total), you could claim 75% of eligible expenses.

What You Cannot Claim

• Expenses for periods of private use
• Capital expenditure (e.g., renovations, extensions) — these may be deductible over time as capital works
• Your own labour or time spent managing the property
• Costs that are not genuinely connected to earning rental income

Capital Gains Tax (CGT) Implications

This is where many short-term rental hosts are caught off guard. If you rent out your main residence — even partially — you may reduce or lose your main-residence CGT exemption when you eventually sell.

How the Main-Residence Exemption Is Affected

Your home is normally exempt from CGT when you sell it. However, if you’ve used it to earn income (including short-term rental income), the ATO will calculate the taxable portion based on:

• The proportion of the home used for rental (floor area)
• The period it was used for income-producing purposes

If you rented out a spare room that represents 20% of your home’s floor area for three of the ten years you owned the property, 6% of any capital gain (20% × 30%) may be taxable.

Important: If you first used your home to produce income after 20 August 1996, you may be able to use the market value at the time of first rental as your cost base — potentially reducing your CGT liability. Keep records of the property’s market value when you first started renting it out.

GST and Short-Term Rentals

For most residential short-term rental hosts, GST does not apply. Standard residential accommodation is “input taxed” under Australian GST law, meaning:

• You do not charge GST to guests
• You cannot claim GST credits on related expenses

However, if your operation is more commercial in nature — resembling a hotel, motel, or serviced apartment — different rules may apply. If your short-term rental turnover exceeds $75,000 per year and the accommodation qualifies as “commercial residential premises,” you may need to register for GST and charge it on bookings.

If you’re unsure whether your operation crosses into commercial territory, seek professional advice.

ATO Data Matching: The Platforms Are Reporting You

The ATO has significantly expanded its data-matching capabilities. Sharing-economy platforms — including Airbnb — are required to report host income data to the ATO. This means the ATO can cross-reference what platforms report against what you declare in your tax return.

Hosts who fail to declare short-term rental income, or who under-report it, face:

• Amended assessments with back taxes owed
• Interest charges on unpaid tax
• Penalties of up to 75% of the shortfall for deliberate omissions

The message is clear: declare all income accurately, every year.

State-Based Levies and Regulations

Federal tax obligations are just one piece of the puzzle. Depending on where your property is located, you may also face:

• Victoria: A 7.5% short-stay levy applies to short-term accommodation bookings in Victoria (excluding owner-occupied properties where the host is present)
• New South Wales: Registration requirements and planning controls apply in some areas
• Western Australia: A registration framework for short-term rental properties is in place
• Queensland: Local government planning policies govern short-term rentals in many areas

Always check your state’s specific rules, your local council’s planning requirements, and any strata or owners-corporation by-laws before listing your property.

Record-Keeping Requirements

Good records are essential — not just for your annual tax return, but potentially for years after you sell the property (for CGT purposes). The ATO recommends keeping:

• Platform booking records and statements
• Bank statements showing rental income received
• Receipts and invoices for all expenses claimed
• Records of private use periods
• Floor area calculations (if renting part of a property)
• Evidence of the property’s market value when first rented (for CGT cost base purposes)

General rental records should be kept for at least five years from the date you lodge your return. CGT records should be kept for at least five years after the property is sold.

Sources

• ATO: Renting out your property
• ATO: Sharing economy and tax
• ATO: Capital gains tax and your home
• ATO: GST and residential premises
• ATO: Sharing economy reporting regime

Get Expert Help with Your Short-Term Rental Tax

Navigating Airbnb tax rules — from income apportionment to CGT implications — can be complex, especially if your property has mixed personal and rental use. Getting it wrong can be costly.

TaxServe Australia’s experienced tax professionals can help you:

• Correctly declare all short-term rental income
• Maximise your legitimate deductions with proper apportionment
• Plan ahead for CGT when you eventually sell
• Stay compliant with ATO data-matching requirements

Contact TaxServe Australia today for a consultation and make sure your short-term rental tax is handled right.