Updated 26 July 2026
In this guide
Step 1: declare the income properly
All amounts earned from hosting are assessable rental income: nightly rates, cleaning fees charged to guests, extra guest fees and cancellation amounts you keep. Declare the gross amount before Airbnb's host service fee, then claim the fee as a deduction; the numbers reconcile to Airbnb's annual earnings summary, which is the document to work from.
And the ATO already has it. Airbnb reports host income directly under the sharing economy reporting regime, which has covered short-stay accommodation platforms since 1 July 2023. Returns missing platform-reported amounts generate the income-matching letters described in our ATO review guide. If past years are missing income, a voluntary disclosure before the letter beats one after it, on penalties and on stress.
Income is declared in the rental schedule of your return, by property, split between owners according to legal ownership regardless of whose bank account the payouts hit.
Step 2: apportion the deductions
Hosting a room in your home means splitting costs three ways: the hosted share of the home, the days it was genuinely available, and any dual-use areas. The standard method is floor area by days:
| Expense type | How it apportions |
|---|---|
| Direct hosting costs: Airbnb fees, guest consumables, cleaning between stays, listing photography | 100% deductible, no apportionment |
| Occupancy costs: mortgage interest, council rates, insurance, land tax where applicable | Floor area % x days hosted or genuinely available |
| Running costs: electricity, gas, internet, water usage | Floor area % (plus a share of common areas during hosting) x hosted days |
| Shared-area costs: lounge, kitchen, bathroom used by guests | Reduced % reflecting shared use, x hosted days |
| Furniture and equipment in the hosted room | Depreciation, hosted-use portion |
A guest room and ensuite make up 15% of a home's floor area, with guests having shared access to common areas adding an agreed 5%. The room hosts guests or is genuinely available 200 days of the year. Annual interest, rates and insurance total $32,000; running costs $4,800. Occupancy claim: $32,000 x 20% x 200/365 = $3,507. Running costs: $4,800 x 20% x 200/365 = $526. Plus 100% of $2,100 in Airbnb fees and cleaning, and depreciation on the room's furnishings. Total deductions around $6,500 against, say, $14,000 of income: $7,500 taxable. "Genuinely available" means listed at market rates without blocking; a calendar blocked 300 days does not support a 200-day claim.
Whole-property listings (a separate investment property or your home while you travel) apportion by days only, and the interest, rates and depreciation claims scale accordingly. Hosting your entire home occasionally while away uses the same day-based logic on 100% of floor area for those days.
Step 3: no GST, but yes to records
Residential rent is input taxed: no GST is charged on Airbnb income, it does not count toward the $75,000 GST registration threshold, and correspondingly you cannot claim GST credits on hosting costs. This surprises hosts who also run businesses; the Airbnb income simply sits outside the GST system. The exception is commercial residential premises (running something hotel-like at scale), which is a different regime and a conversation before you get there.
Records: the Airbnb earnings summary, a floor plan with measurements supporting the percentage, the availability calendar, and receipts for everything claimed, kept five years.
The CGT catch: what hosting really costs
Your main residence is normally fully exempt from CGT. Use part of it to produce income and that part loses the exemption for that period. When you eventually sell, a slice of the gain becomes taxable, calculated on the income-producing floor area and the time it was used, and because home values move in hundreds of thousands, this slice routinely dwarfs every dollar of tax saved on deductions along the way.
The 20% host above rents the room for 4 years out of 12 years of ownership, then sells with a $600,000 gain. Taxable portion: $600,000 x 20% x 4/12 = $40,000, halved to $20,000 by the 50% CGT discount for assets held over 12 months. At a 39% marginal rate, roughly $7,800 of tax, against perhaps $5,000 to $8,000 of total deduction benefit over the hosting years. Hosting can still be worthwhile; it just is not free, and the exemption loss applies from when the income use starts, whether or not you claim the deductions. Not claiming occupancy deductions does not preserve the exemption.
Two interactions worth knowing:
- The home first used to produce income rule can reset your cost base to market value at the date income use began, which often shrinks the taxable slice for long-held homes. A valuation at hosting start (retrospective ones can be obtained) protects this.
- The 6-year absence rule applies when you move out entirely and rent the whole home: you can keep treating it as your main residence for up to six years while it produces income, provided you claim no other main residence. It does not cover renting rooms while you live there; that is the apportionment world above. The CGT discount changes coming from 1 July 2027 make the sale-timing conversation live for anyone already planning an exit.
The state layer: levies and registration
Income tax is only the Commonwealth piece. Depending on where the property sits, a state layer now applies: Victoria charges a short stay levy of 7.5% of total booking fees for stays under 28 days, paid by the platform or host depending on how the booking runs, and several states and councils operate registration schemes, night caps or planning rules for short-stay properties. South Australia currently has no levy of its own, but land tax can enter the picture where the hosted property is not your principal place of residence, and hosting part of a home does not generally disturb the PPR land tax exemption. The state layer changes frequently and is jurisdiction-specific; it belongs on the checklist every time a new listing goes live, alongside your insurance, because standard home policies routinely exclude paying guests.
Frequently asked questions
Do I have to declare Airbnb income if it's just a spare room?
Yes. All hosting income is assessable rental income, and Airbnb reports host earnings directly to the ATO under the sharing economy reporting regime.
Do I pay GST on Airbnb income?
No. Residential rent is input taxed: no GST regardless of the amount, no counting toward the $75,000 threshold, and no GST credits on hosting costs.
What can I deduct as an Airbnb host?
Direct hosting costs in full, plus the floor-area and days-hosted share of interest, rates, insurance, utilities and depreciation on the hosted area.
Does renting a room on Airbnb affect my main residence CGT exemption?
Yes. The income-producing portion loses the exemption for the hosting period, making part of your eventual sale gain taxable. This applies whether or not deductions were claimed.
What is the 6-year rule for Airbnb?
If you move out entirely and rent the whole home, it can remain CGT-exempt as your main residence for up to six years. It does not apply to renting rooms while you live there.
Should I get a valuation when I start hosting?
Usually yes for whole-home income use, since the cost base can reset to market value when income use begins, and a contemporaneous or retrospective valuation locks that figure in.
Host with the full picture
We prepare the rental schedule, the apportionment file and the CGT position together, so the sale-day surprise never happens. Talk to our property tax team.
Talk to our property tax teamThis article provides general information only, current at the date of publication, and does not constitute personal tax, legal or financial advice. Consider your circumstances or speak with us before acting. Liability limited by a scheme approved under Professional Standards Legislation.
