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 times 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 for the period of 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 gardens.
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 depreciation 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 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 $13k in tax depreciation up for grabs!
The property: Newly renovated, new appliances and new furniture installed at 1-bedroom Airbnb apartment in trendy Potts Point. One bathroom, three beds. Accommodates three people. 2km to the Sydney CBD. Minimum seven-night stay.
The story: When one of our senior tax depreciation specialists was looking for some Airbnb accommodation for his sister and her husband in Sydney recently, he stumbled across this trendy apartment in Potts Point. Out of interest, Alex calculated the depreciation deductions its owner could be claiming.
The savings: Based on the recent renovation the apartment had undergone and the value of the brand-new furniture, the estimate of annual tax depreciation entitlements that could be claimed on this Airbnb was $13,866, which breaks down to $265.86 a week and $37.98 a day.
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. $13,866 is a lot of money in anyone’s books and including this in their tax return will save the owner of this apartment 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, or to have your current depreciation schedule reviewed free of charge, please don't hesitate to get in touch 1300 922 220.
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