Did you know you can claim tax depreciation on any property you operate as an Airbnb?
Opening up a home as an Airbnb is becoming an increasingly popular way to earn extra income because it enables property owners to financially leverage assets they already own.
But what many people don’t know is that in addition to the standard tax advantages of letting out a property, you can also claim tax depreciation for the time that the room, unit or house was available for rent.
It doesn’t matter if the property was let for a month, a week, or one day – you are still entitled to claim depreciation as part of your tax return because, during that time it was available, it was an income-producing concern.
You can claim depreciation on brand-new furniture you have installed; and if the property is an apartment, you can also claim for your portion of the common areas such as foyers, games rooms and pool facilities.
Even when you are just letting out a portion of the property, say one or two rooms, you can claim depreciation on a pro-rata basis calculated on a floor area formula.
Imagine you live in a two-bedroom apartment and you rent one of the rooms out as an Airbnb. For the time you have a tenant in the room, you can claim a pro-rata depreciation deduction on brand-new furniture and brand-new appliances in all your shared areas, including items such as kitchen appliances, lounges, tables and televisions.
What’s more, the building does not have to be new because any renovations or improvements you’ve made to the property will be costed and included for depreciation purposes.
It’s also interesting to note that your property only has to be available to entitle you to claim depreciation. It does not have to be occupied. So, if you have your Airbnb actively advertised as available for 200 days of the year, but it was only occupied for 175 days, you can still claim depreciation on the 200-day period.
If you’ve jumped on the Airbnb bandwagon, it makes sense to ensure you are claiming everything you are entitled to. The best way to do this is to have a professional tax depreciation schedule completed on your Airbnb property.
And that’s where Capital Claims Tax Depreciation can help. Call us on 1300 922 220 and we’ll get the ball rolling!
More than $32k in tax depreciation up for grabs!
The property: Rural property in the Hunter Valley on a small acreage.
The story: The rural property is an old traditional farm cottage overlooking a creek that accommodates 12 people. The owners completed a renovation which consisted of a new roof, kitchen, bathroom and wrap around verandah.
They also installed brand-new furniture plus converted the old barn into a living/games room.
The savings: Based on the recent renovation the old traditional farm cottage and the value of the brand-new furniture, the tax depreciation entitlements that could be claimed on this Airbnb was $32,884 in the first full financial year and $126,846 over the first 5 financial years.
The lesson: It’s really important to have an accurate, professionally completed tax depreciation schedule done for your Airbnb property. Using a professional who will claim everything you are entitled to is vital. $32,884 is a lot of money in anyone’s books and including this in their tax return will save the owner of this farm cottage a fair chunk of tax.
If you own an investment property, the best way to ensure your depreciation deductions have been maximised is to use a depreciation schedule prepared by Capital Claims Tax Depreciation. For an estimate of deductions you may be entitled to, visit our ‘Free Estimate of Deductions,’ or please don't hesitate to get in touch with one of our friendly experts on 1300 922 220.
Airbnb is an online platform connecting homeowners with travellers. A homeowner will list their property as holiday accommodation for travellers to stay.
It is often cheaper accommodation than a hotel as Airbnb do not have the same overhead costs as hotels. It also has a “homier vibe”.
What do Airbnb hosts provide?
Airbnb hosts will provide essential amenities such as toilet paper, linen, pillows, towels and hand soap. Some may offer extras like shampoo and conditioner, cleaning supplies and basic cooking supplies salt, pepper and oil.
Mark is an expert quantity surveyor, business owner, public speaker and property developer. With 20+ years experience in the construction and quantity surveying industry Mark’s specialist expertise have been sought in consultant capacity by professional bodies such as the National Institute of Accountants and the National Tax and Accountants Association, and he has presented at various property and tax seminars and expos nationwide. Mark holds a Bachelor of Construction Management from the University of Newcastle, is an affiliate member of the Australian Institute of Quantity Surveyors and a Registered Tax Agent.View all posts by Mark Wilkins