Re-Renting: Subletting on Airbnb Tax Implications

Currently thinking about future accommodation and income sources (since I can't expect my current basically-no-rent situation to last forever. I don't mind sharing accommodation, so will consider share housing or airbnb like part time sharing. All the tax discussions I can find seem to be about owning the home. On the ATO website under the business section I saw some vague information about the sharing economy and tax.

Whilst I have considered owning a house and then renting out rooms (sharer or airbnb) I don't like the CGT implications. I was thinking about my friends situation, she rents a house for, say, $400 a week (off a relative at market rent), then with the landlords permission, she sublets to two others who pay $200 per week per room. So effectively she is not paying rent (although she pays the bills). Obviously the major difficulty with doing this is finding the right landlord.

So my hypothetical for the day...

Renting an apartment for $400 with a flexible landlord who is happy for you to sublet, you then sublet or airbnb, say making $400 a week...

When renting and subletting (airbnb or not), how is this assessed? In my mind if the income is less than the rent are they not just contributing to the rent? Guessing the ATO doesn't care how the rent is split? What if the income is more than the rent (e.g. strong overnight rate in peak season)?

 

I would think have to apportion the rent claimed as a deduction and then declare all the rent received as income.

 

I think most people wouldn't mention it at all in their taxes. Not sure if they'll run foul of the ATO though if they do that. Secondly Airbnb has all the records of income paid and the income could easily be matched to the individual.

 

In my mind I am struggling to determine if there is a difference between short term accom vs. The share house scenario.

 

I don't think there is much difference. But doing a short term accountation thing is more like a business because of its repetitive nature.

If your example above I think your friend would probably be making $200 profit per week.

 

The rental income is assessable income ie $400pw. To offset this there may be a deduction for 2/3 of the rent cost. ie $266pw. It is a profit making intention rather a share of rent and private.

 

Would the distinguishing factor be that they sublease? Vs being on the lease (no income)

 

Newspaper reports state that the ATO will receive records of all payments by airbnb and uber and will check for declared income by individuals.

If you choose not to declare income you may be in for a rude awakening. With computer matching it is only a matter of time till you are caught out.
Marg

 

The ATO has access to so much data - Share trades, commodities trading, those dodgy supermarket gold buyers, ebay, gumtree and much much more. Its normal that in around 9 mths they compare returns lodged and seek explanations for missing income.

This year I'm also expecting improved data from property sales in the 2016 + 2017 years to trigger a range of enquiries - GST through to CGT. And since the states share the data it follows a load of land tax issue may be detected incl non-resident issues

 

Just want to emphasis I would never fail to declare income to the ATO. My question is around what is income. If I paid my housemate half the rent and they paid that to the landlord that is not income. But what if I wasn't in the lease or what if the rent wasn't evenly split?

 

i wonder how many tenants sublet a room on airbnb without the owners consent.

im not recommending it. just curious.

 

I only know of one. In Sydney. She makes the weeks rent just my renting it Friday and Saturday night's. Also does it whilst she housesits

 

I see an ATO project where they accumulate addresses from AirBnb and then wait for CGT sales and look for unreported CGT events and unreported taxable income. And then smash the owner when they claim it was their main residence.

 

Yep... I know someone who did it with the apartment they rented in Bondi.... covered her rent and even made a profit, by renting it on weekends. I don't think the owners knew.

 

CGT calcs going to be a mess. Whole heap of third element costs which will need to be apportioned as well. If not will end up paying more CGT than necessary

 

An accountant I changed recently pretty much told me that since my expenses were more than my income using airbnb I need not declare it as there is no profit to declare. I thought it was dodgy But we ended up not declaring it (this was in 2015 tax return) I still think I should correct this somehow.. I've declared all income since as it made me uneasy

 

Good golly!

 

Yes any work I did not hand to him on a plate he wouldn't do on his own and would tell me some reason why it made sense not to.

 

Is this person still practicing? Share your concerns with the tax practitioners board . They should not be a tax adviser

If expenses are greater than income for airbnb the loss offsets other income. What a muppett

 

Practicing and he's a lawyer too. There's apparently never been any issue with ATO and his company ever.

The reason I finally moved on was when I called him once and asked him about trust structures and after a couple of minutes of telling me I don't really need one he told me to look it up on the Internet. I was like fine, but a month later got a 220 Aud bill tacked onto my tax return claiming "consultation".