Airbnb and Short-Term Rental Tax

Income reporting, deductible expenses, apportionment rules, the Sharing Economy Reporting Regime (SERR) from 1 July 2023, CGT main residence exemption loss, GST classification, the s 26-50 leisure facility warning, and state-level registration and levy requirements.

All income from short-term letting on platforms like Airbnb, Stayz, or Booking.com is assessable and must be reported at the gross amount before platform commission deductions. Since 1 July 2023, the Sharing Economy Reporting Regime (SERR) requires platforms to report detailed host transaction data directly to the ATO, making under-reporting extremely high risk. Using a main residence for Airbnb can permanently reduce the CGT main residence exemption on sale, and the ATO's draft PCG 2025/D7 flags tighter enforcement on holiday home deductions from 2026-27.

Last reviewed: 27 May 2026

Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact ATO. Read our editorial scope →

Income reporting obligations

All short-term rental income is assessable regardless of whether you rent a whole property, a spare room, or only rent for part of the year. Report gross income (total amount guests pay before the platform deducts commission), including separately charged cleaning fees, services, and other amounts. The SERR requires platforms to provide the ATO with host identification (name, date of birth, address, email, phone, bank account, ABN, GST status) and transaction data (gross payments, net amounts, GST amounts, transaction counts and dates). Cross-matching against your tax return is automated.

Deductible expenses

Standard rental deductions apply: interest on loans, council and water rates, land tax, insurance, repairs and maintenance, cleaning, gardening, utilities, property management fees, depreciation, and capital works deductions. Short-term rental hosts can also claim cleaning between guests, laundry and linen costs, consumables (toiletries, tea, coffee), guest amenities, professional photography, listing and platform fees, dynamic pricing tools, channel manager software, and short-stay management fees.

s 26-50 leisure facility warning

The ATO's draft PCG 2025/D7 emphasises that holiday homes and leisure-orientated properties may have holding cost deductions denied under s 26-50 ITAA 1997 unless the property is mainly used to produce assessable income. Deductions must be fair and reasonable, properly apportioned where there is private use, spare capacity, or non-commercial use. Enforcement is flagged from 2026-27 onward.

Apportionment rules

If a property is used partly for private purposes and partly to earn rental income, deductions must be apportioned. Time-based apportionment splits expenses based on days genuinely used or held to produce income (actually rented plus genuinely available for rent) compared with total days. Area-based apportionment applies where only part of the dwelling is rented (one bedroom and shared areas). The ATO expects 'genuinely available for rent' to mean broadly advertised, on realistic terms, at market rates, and not subject to unreasonable restrictions.

CGT and the main residence exemption

Using a main residence for Airbnb can reduce the CGT main residence exemption on sale under Subdivision 118-B ITAA 1997. Full exemption applies only where the dwelling is your main residence for the entire ownership period and was never income-producing. Any period of income-producing use triggers apportionment by time and area.

Apportionment in practice

Time apportionment: proportion of days the dwelling (or relevant part) was used to produce income compared with total days in the ownership period. Area apportionment: proportion of floor area used for income-producing purposes compared with total area. These are multiplied together to determine the taxable fraction of the capital gain.

6-year absence rule interaction

The 6-year absence rule allows a former main residence to continue as such for up to 6 years while rented, provided no other main residence is chosen. However, periods during which the property actually produces income still generally reduce the exemption. The 6-year rule does not 'ignore' the fact that rent was earned.

GST and short-term accommodation

Most Airbnb-style rentals of houses, apartments, and holiday homes are residential premises, which are input-taxed for GST (no GST charged, no input tax credits). GST only applies where the accommodation is classified as commercial residential premises (hotel-style services, short stays with cleaning and linen, marketed as a business) and GST turnover from taxable supplies exceeds $75,000. Where all supplies are input-taxed, the $75,000 threshold is irrelevant and GST registration is not required.

State and local government rules

Several states impose additional requirements on short-term rental hosts. NSW and Tasmania require registration with a unique registration number displayed in listings. Victoria imposes a statewide 7.5% short-stay levy from 1 January 2025 on bookings under 28 days, calculated on the accommodation component and generally borne by guests. Many councils impose planning and zoning requirements, caps on the number of nights per year, limits on whole-home versus hosted stays, and fire safety requirements. Strata schemes can adopt by-laws restricting or prohibiting short-term letting.

Worked example: full-time investment unit on Airbnb

Raj owns an investment apartment in Brisbane listed full-time on Airbnb, never used personally. Gross income: $60,000. No private-use apportionment is required because the property is used solely to produce income and is genuinely available all year.

Statute references

ITAA 1997 s 26-50 (leisure facility deduction denial)
ITAA 1997 Subdivision 118-B (main residence CGT exemption)
ATO PCG 2025/D7 (holiday home and short-stay deduction enforcement from 2026-27)
Treasury Laws Amendment (Sharing Economy Reporting Regime) (platform reporting obligations from 1 July 2023)
GST Act 1999 s 40-35 (input-taxed supply of residential rent)
Victoria short-stay levy legislation (7.5% from 1 January 2025)

Frequently asked questions

Do I report gross Airbnb income or the amount after platform fees?+

Report the gross amount (the total guests pay before the platform deducts its service fee). The platform commission or service fee is a separate deductible expense. Other amounts you charge separately (cleaning fees, breakfast, airport transfers) are also assessable income.

How does Airbnb affect the CGT main residence exemption?+

Using a main residence for income-producing purposes (renting a spare room or the whole home) can permanently reduce the CGT main residence exemption on eventual sale. The reduction is calculated by apportioning the capital gain based on time (proportion of days the dwelling earned income) and area (proportion of floor area used for income). Continuously letting a spare room over years creates a taxable CGT portion that cannot be recovered.

Do I need to register for GST as an Airbnb host?+

Most Airbnb-style hosts supply residential premises, which are input-taxed for GST purposes. If all your supplies are input-taxed, you do not register for GST regardless of income level. GST registration is only required if your activity is classified as commercial residential premises (hotel-style services) and your GST turnover from taxable supplies exceeds $75,000.

What is the s 26-50 leisure facility rule and should I be worried?+

Section 26-50 ITAA 1997 can deny deductions for holding costs (interest, rates, insurance) on holiday homes mainly held for private recreation rather than genuinely producing income. The ATO's draft PCG 2025/D7 signals tighter enforcement from 2026-27. If your holiday rental is listed at unrealistic prices, restricted to friends and family, or predominantly blocked for personal use, deduction claims are at risk.

Last reviewed: 27 May 2026