Considering buying PPOR but overseas quite often, is AirBNB feasible when away?

Considering buying my first PPOR, 1-2 bedroom apartment in the Sydney CBD or nearby (such as Alexandria).

I am overseas at least 2-4 months a year. I was just wondering if I put the place on AirBNB when I'm away:

• What sort of occupancy rates would I likely see, would I have any chance of covering my mortgage before taking income tax into account? It seems like rates are pretty high, just not sure what occupancy is actually like.
• Will this affect my borrowing power/options? I assume I might need to tell the lender.
• How much would doing this affect me from a CGT point of view if I sell eventually?

I know I'd need to keep an eye out for complexes that prohibit short-term letting.

Does anyone do anything similar at the moment with their PPOR?

 

Airbnb as a means to address short letting is problematic with constant need to address laundry, clean etc. Vacancy periods etc. Outsource that and expect hefty fees and there are sepcialised agencies that can help. So ensure rent v costs is worth it. And watch for insurance issues since you need a specialised policy and not a basic LL policy. Your own policy could even be void...discuss with a insurer.
You cant use the absence rules however so detailed records of your absence but its also possible your are merely temporarily absent so you % of property retains expemtion to a pro-rata issue BUT...all non-deductible ownership costs while you do live there may be fully OR partialy added to the CGT costbase.

Wise to get tax advice.

Also if you are using first home buyer concessions check you dont breach anything

If you are absent at 31 December you could still have a land tax issue. Wise to address that also

 

Tax Tip 245: Can you use the 6 year rule with a short rental on Airbnb? Tax Tip 245: Can you use the 6 year rule with a short rental on Airbnb?

 

I have a friend who used to do this by sub-letting existing properties and said Air BnB is essentially a cleaning business so you need this sorted before considering the option?

 

The operation and management of AirBnB are crucial. You can entrust others or engage a specialized AirBnB management company to handle tasks such as furniture cleaning, safety, check-in and check-out procedures, and more. My wife manages a property in this manner.

 

A couple of things
1. Land tax. Eg NSW may still see the property as unoccupied as the PPOR on a taxing date and the land tax rules arent friendly to partial occupancy. I query if you still meet the occupancy anyway as you are just temporarily away and retain the occupancy with possessions. Its like staying a night at a friends. . OSR ruling ?
2. CGT should be OK. However the very first rent a triggers s118.192 costbase reset. How may that affect acquisition costs ?
3. Insurance. A Short stay policy and a owner occupied policy ? How may that work ? BOTH may need to know of the other.
4. Pro-rata CGT based on # days each year pretty simple if you maintain continual records
5. 3rd element costs can be used AFTER the first rental. ie the non-deductible wnership costs aftre deducting the % based on let nights. Will enhance costbase before apportioning.
6. Airbnb does favour good locations eg Holiday places . Alexandria isnt exactly Manly beach.
7. Repairs may be % deductible for some or 100% for specific issues. Need good records.
8. You may be able to handle handover (?) and cleaning and limit costs.